In the life-cycle hypothesis,people are assumed to have a consumption pattern that leads them to save
A)at no point in their life.
B)in the working years up to retirement.
C)in their retirement years.
D)in every year of their life.

Question

Quizplus · Accepted Answer

According to the life-cycle hypothesis, people tend to save during their working years to provide for their retirement years. Therefore, option B is the best choice. Option A is incorrect because it assumes individuals do not save at all, while option C is incorrect because it assumes individuals only start saving in their retirement years. Option D is also incorrect because it assumes individuals save in every year of their life, which may not always be the case.

In the Life-Cycle Hypothesis,people Are Assumed to Have a Consumption