According to the Classical Theory's long-run view of the forces driving interest rates people's consumption and savings habits tend to follow a predictable ____ younger workers borrowing heavily and older workers saving more. The word or phrase that correctly fills in the above blank is:
A) Life cycle
B) Time preference
C) Consumption-savings component
D) Pattern of deferred consumption
E) None of the above

Question

Quizplus · Accepted Answer

The correct term is "Life cycle," which refers to the predictable pattern of younger workers borrowing for consumption and older workers saving more, typically for retirement. This concept is part of the life-cycle hypothesis in economics, which explains how individuals plan their consumption and savings behaviour over their lifetime.

According to the Classical Theory's Long-Run View of the Forces