It is often said that high rates of inflation tend to diminish people`s incentive to save and invest. This view must be incorrect, however, because people generally saved and invested more of their income in the 1970`s when inflation rates were high than they did in the 1980`s when inflation rates were low.
Of the following, the best criticism of the argument above is that it overlooks the possibility that
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Aall people do not respond in the same way to a given economic stimulus
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Bcertain factors operating in the 1980`s but not in the 1970`s diminished people`s incentive to save and invest
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Cthe population was larger in the 1980`s than it was in the 1970`s
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Dthe proponents of the view cited would stand to gain if inflation rates become lower
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Ea factor that affects people's savings behavior in a certain way could affect people`s investment behavior quite differently
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