Which of the following statements is not correct? Select one: a. The percentage

Question

Which of the following statements is not correct?

Select one:

a. The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States.

b. Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income.

c. Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income.

d. The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old.

Explanation / Answer

The incorrect statement is (D). The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. It is because the theory doesn't explain why gifts of goods and services reduce poverty for very young and the very old instead the life-cycle hypothesis suggests that individuals plan their consumption and savings behaviour over their life-cycle.

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