People smooth out consumption over time:
A)because they become wiser as they age.
B)because older people require less consumption.
C)because utility of consumption increases with age.
D)to raise their level of utility.

Question

Quizplus · Accepted Answer

People smooth out consumption over time to maintain a relatively constant level of utility or satisfaction. This means that they try to avoid large fluctuations in their consumption patterns, which can lead to either excess or insufficient utility. By spreading out their consumption over time, people can optimize their level of utility and derive the most benefit from their available resources.

People Smooth Out Consumption Over Time