Fay says that the economy is likely to experience lasting growth when individuals are spending all of their disposable income instead of saving. Describe whether Fay's statement is correct.
Fay is not correct. The strength of the economy is not correlated to the amount individuals save versus spend.
Fay is not correct. The economy can rebound quickly from a recession when consumers have higher amounts of savings. Having more savings spurs more long-term growth.
Fay is correct because more jobs are created when people are spending and taking on additional debt. Consumers can pay off the debt with higher incomes.
Fay is correct because the economy has slower growth when individuals are saving. A recession lasts longer when consumers are saving more instead of spending.