Question

The downturn in the economy last year has prompted many companies to make widely publicized layoffs, resulting in thousands of lost jobs. Economists predicted that these layoffs would cause people generally to cut back on their discretionary spending even if their jobs were secure, in anticipation of coming hard times. However, this prediction has not come to pass, since there has been no increase in the amount of money set aside by the general public in savings accounts.

The answer to which of the following questions would be most useful in evaluating the significance of the savings patterns described above?

• A. What business sectors were most affected by the layoffs?
• B. How much of their savings, on average, do laid-off employees deplete before finding new employment?
• C. What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?
• D. What percentage of people laid off have savings accounts?
• E. What has been the average salary during the period since the layoffs?

Answer 1

The correct option is C What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?

Option C clearly points out on that and if we evaluate the rise in those necessary items we might be able to judge why the savings have fallen.