Figure 15-1

-Figure 15-1 above displays the consumption pattern over the lifetime of an individual.Saving and asset accumulation occur during the years ________ according to ________ theory of consumption.
A)R to L;Keynes'
B)R to L;Modigliani's
C)O to R;Friedman's
D)O to R;Modigliani's

Question

Figure 15-1
 
-Figure 15-1 above displays the consumption pattern over the lifetime of an individual.Saving and asset accumulation occur during the years ________ according to ________ theory of consumption.
A)R to L;Keynes' 
B)R to L;Modigliani's 
C)O to R;Friedman's 
D)O to R;Modigliani's

Quizplus · Accepted Answer

The consumption pattern in Figure 15-1 starts low in the early years (O) and increases gradually throughout the individual's lifetime (R). This is consistent with Modigliani's life-cycle theory of consumption, which states that individuals tend to save more in their early years to accumulate assets and then consume those assets later in life. Therefore, option D, "O to R;Modigliani's" is the best choice.

Figure 15-1 -Figure 15-1 Above Displays the Consumption Pattern Over the Lifetime