The life-cycle theory of consumption can be summarized as follows:
A)retired people need less so they can save more than working people
B)people want instant gratification and seldom worry about the future
C)people always tend to consume almost all of their current income
D)people plan their consumption and saving patterns to optimize the lifetime benefit from their disposable income
E)people adjust their current consumption constantly to keep a stable saving pattern over their lifetime

Question

Quizplus · Accepted Answer

The life-cycle theory of consumption posits that people plan their consumption and saving patterns to optimize the lifetime benefit from their disposable income. This means that people aim to balance their consumption and savings over their lifetime to ensure that they can meet their needs and goals both in the present and in the future. The theory suggests that people tend to consume more during their working years when their incomes are higher, and save more during their retirement years when their incomes are lower.

The Life-Cycle Theory of Consumption Can Be Summarized as Follows