The life cycle model explains saving primarily as
A) a desire to leave a bequest to one's heirs
B) a response to uncertainty regarding longevity
C) a response to high real interest rates
D) a response to employment and demographic changes over one's lifetime
E) the result of under-estimating real wealth

Question

Quizplus · Accepted Answer

The life cycle model explains saving as a response to employment and demographic changes over one's lifetime, such as changes in income, retirement, and healthcare expenses. This model suggests that individuals save more during their working years and spend down their savings during retirement, based on their expected income and expenses over their lifetime.

The Life Cycle Model Explains Saving Primarily as