The U.S. saving rate from -0.1 percent in 2011 to 2.0 percent in 2012 to 2.4 per

Question

The U.S. saving rate from -0.1 percent in 2011 to 2.0 percent in 2012 to 2.4 percent in 2013, to 2.9 percent in 2014, and to 3.0 percent in 2015. A negative saving rate might be something to worry about because US, saving might be increased by . 0 A, eventually households must repay their borrowing; O B. a negative saving rate leads to recession; O C. a negative saving rate is lilegal O D. debts cannot be passed to the next generation; O E. eventually households must repay their borrowing O A. health-care premiums increase B. consumption expenditure exceeds disposable income O c. consumer confidence decreases O D. disposable income increases faster than consumption expenditure O E. disposable income decreases decreasing taxes on interest income decreasing the government budget deficit decreasing taxes on interest income decreasing the government budget deficit 1) Option D is correct. Inside the PPF and on the PPF 2) Option C is correct. Point A, B, C, D and E

Explanation / Answer

Answer of First question is Option B.

A negative saving rate occurs, if consumption expenditure exceeds disposable income. This is because, when their consumption expenditure increases more than their income, they will now spend more than you earn,  so you're dipping into your savings or you're borrowing to pay for purchases which increses your consumption more than your income.

Answer of Second question is Option E.

A negative saving rate might be something to worry about because eventually households must repay their loans or borrowing means that consumers may be pumping plenty of money into the economy, they’re putting themselves at risk of facing a financial disaster that could slow thing down for everyone in the future.

U.S. saving might be increased by decreasing te government budget deficits because the national savings rate includes government savings, and they are usually reporting deficits, which lower the national savings rate. Household pays their borrowings and also interest to the government, which eventually increase the govt. treasure and decrease the govt. budget deficits.

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