Question

in one of the articles you read in module 4.2 you learned how social media can destroy your finances. in that article they mentioned the phrase \keeping up with the joneses.\ what is meant by this phrase?
this phrase refers to the concept of saving up for only your needs in your budget, not your wants.
this phrase refers to the newest reality television show that demonstrates the effect of saving early and often.
this phrase refers to the human behavior of wanting to spend more because we see others around us spending more and enjoying goods and services that we think we would enjoy as well.
this phrase refers to the annual event in august where investors compete with each other to see who can beat the market.
question 2 25 pts
when developing a savings plan, what is true about saving and inflation?
in order to not lose purchasing power over time, the rate of return for saving should be higher than the rate of inflation
in order to not lose purchasing power over time, the rate of return for saving should be lower than the rate of inflation
there is no relationship between saving and inflation
to maximize saving, the rate of return for saving should be exactly equal to the rate of inflation

Explanation:

• For the first question: "Keeping up with the Joneses" is a common idiom. It's about the human tendency to want to match or exceed the consumption or lifestyle of one's peers or neighbors. When people see others around them spending more and enjoying certain goods and services, they often feel compelled to do the same, which can lead to over - spending.
• For the second question: Inflation reduces the purchasing power of money over time. If the rate of return on savings is higher than the inflation rate, the real value (purchasing power) of the savings increases or at least doesn't decrease. If it's lower, the purchasing power of the savings decreases. If it's equal, the purchasing power remains the same in nominal terms but doesn't grow in real terms.

Answer:

• First question: This phrase refers to the human behavior of wanting to spend more because we see others around us spending more and enjoying goods and services that we think we would enjoy as well.
• Second question: In order to not lose purchasing power over time, the rate of return for saving should be higher than the rate of inflation.