The hypothesis that people attempt to stabilize their consumption over their entire lifetime is the
A)life cycle hypothesis.
B)forward looking expectation hypothesis.
C)permanent-income hypothesis.
D)None of the above.

Question

Quizplus · Accepted Answer

The hypothesis that people attempt to stabilize their consumption over their entire lifetime is called the life cycle hypothesis. It suggests that individuals save during their high-income years to spend during their retirement or low-income years, thereby smoothing out their lifetime consumption pattern.

The Hypothesis That People Attempt to Stabilize Their Consumption Over