The life-cycle model of consumption and saving indicates that _____
A) young people pay off debt.
B) middle-agers draw down their saving.
C) older people dissave.
D) net savings over a lifetime are usually little or nothing.
E) net savings over a lifetime are usually substantial.

Question

Quizplus · Accepted Answer

The life-cycle model suggests that individuals plan their consumption and savings behavior over their lifetime, aiming to smooth consumption. As a result, net savings over a lifetime tend to be little or nothing, as people save during their working years and dissave during retirement.

The Life-Cycle Model of Consumption and Saving Indicates That _____