In the life-cycle hypothesis of consumption,two individuals with the same age,tastes,family composition,and income will
A)consume the same amount.
B)each consume less the greater is their accumulated wealth.
C)each have positive saving ratios.
D)consume differing amounts if their wealth differs.

Question

Quizplus · Accepted Answer

The life-cycle hypothesis states that consumption is determined by an individual's income over their lifetime, and that individuals will save during their working years in order to consume more during retirement. Therefore, if two individuals with the same characteristics have different levels of wealth, they will consume different amounts as their wealth influences their consumption decisions. So, option D is the correct choice.

In the Life-Cycle Hypothesis of Consumption,two Individuals with the Same