1. buying homes above our means
   spending money on credit
2. both of the above

The current financial crisis is the result of overspending by banks, government, corporations and everyday people. As a society, we have bought homes above our means and we have spent money we don't have.

1. 36 percent
   56 percent
2. 86 percent

According to a recent survey, 86 percent of Americans have decreased their spending or changed their investment plans as a result of the financial crisis.

1. “Save, save, save!”
   “Spend, spend, spend!”
2. “Save and spend!”

The American government desperately wants its people to spend! In fact, 70 percent of American economic activity is the result of consumer spending.

1. Buy unprocessed food.
   Buy unprepared food.
2. both of the above

Processed and prepared food will always cost more than non-processed and unprepared food. For example, consider the price difference between shredded cheddar cheese compared to a block of cheddar cheese.

1. loss of jobs
   poor interest rates
2. both of the above

Low spending results in low production, and low production results in job loss. Further job loss simply perpetuates the cycle of low spending even more.

1. Spending leads to personal debt, but improves the economic situation.
   Saving decreases personal debt, but perpetuates an economic crisis.
2. both of the above

Paradox of thrift, first coined by Keynes during the Great Depression, involves the lose-lose situation between spending and saving in an economic crisis. Spending may increase your debt, but it helps improve the economy. Whereas saving decreases your debt, but further perpetuates an economic crisis.

1. to avoid public panic
   to increase spending
2. both of the above

The economy will falter if no one spends. This is why the government urges its citizens to shop and why both the Bush and Obama administrations provided big tax rebates to tits citizens.

1. below 1 percent
   1 to 5 percent
2. 5 to 10 percent

Saving was so unpopular in the United States that saving rates actually went below one percent in 2005. Not only were Americans not saving, they were spending their already accumulated savings.

1. below 1 percent
   1 to 5 percent
2. 5 to 10 percent

Since 2005, the United States savings rate has skyrocketed to a decade high of 5.7 percent. But this was bad timing for the economy, as Americans should be spending in a time of crisis, not saving.

1. everyone
   only those not in debt
2. only those who are employed

Despite the grim economic situation, millions of American have no debt and live within their means. These are the people who should increase their spending.

1. Invest in stocks and bonds.
   Buy products that help you save money.
2. both of the above

“Spend to save” refers to buying items that will eventually help you save money. For example, buying a new home heating system will result in lower energy bills.

1. They have massive earnings and savings, living in luxury.
   They have massive earnings and savings, living in modesty.
2. They have modest earnings but live well below their means.

Most millionaires do not live in the lap of luxury. In fact, most millionaires have modest earnings, but save wisely and live well below their means.

1. It gives money to the banks .
   It takes money away from creditors.
2. both of the above

The current economic crisis is largely the result of banks literally running out of money. It is crucial that those who can afford it, continue to pay their mortgages and deposit money into their savings accounts, providing banks with much needed liquidity.

1. Being thrifty involves spending wisely and helps, rather than weakens, the economy.
   Taking money out of circulation by stashing it in your house is detrimental to the economy.
2. both of the above

Spending within your means and putting money into the bank through mortgage payments helps the economy. However, hoarding money under your mattress for when the financial world collapses just further perpetuates the current economic crisis.

1. keeping it
   slowly lending money again
2. quickly lending money again

Banks are actually “hoarding” their billions in government bailouts. Banks are still very cautious in granting loans and mortgages, which ultimately is not helping the economy.

1. 3.5 percent
   6.5 percent
2. 9.5 percent

The unemployment rate in the United States reached a staggering 9.5 percent in June 2009. Moreover, a growing number of unemployed Americans have simply stopped looking for jobs altogether.

1. Create an emergency fund.
   Pay off debt.
2. both of the above

Most financial advisers recommend paying off debt and investing in an emergency fund. Basically, you need to save to survive.

1. 25 percent
   50 percent
2. 75 percent

People don't have much faith in the American population. Respondents in a recent survey predicted that 75 percent of Americans would return to old spending habits.

1. 23 professionals
   33 professionals
2. 43 professionals

Most financial professionals have an optimistic view about American's spending and saving habits. In fact, 43 out of 46 financial professionals surveyed believe Americans have reached a new economic era of saving and spending wisely.

1. Buy in bulk.
   Buy smaller potatoes in a bag rather than large individual potatoes.
2. both of the above

There are hundreds of little supermarket savings tricks. Did you know it's cheaper to buy the smaller potatoes in a bag rather than larger individual potatoes? Also, consider buying in bulk, as long as the item has a long shelf life.