The life-cycle hypothesis applies the concept of ________ to retirement.
A)income & substitution effects
B)transitory income
C)autonomous consumption
D)consumption smoothing

Question

Quizplus · Accepted Answer

The life-cycle hypothesis suggests that individuals will aim to smooth out their consumption over their lifetime, therefore D) consumption smoothing applies to retirement planning. This means that individuals will save during their working years to ensure they have enough funds to sustain their desired level of consumption in retirement. Options A, B, and C are not directly related to retirement planning.

The Life-Cycle Hypothesis Applies the Concept of ________ to Retirement