The fact that 80% of the assets accumulated during a lifetime are bequeathed to heirs in the United States suggests that
A)the appropriate time horizon for consumption theory is the lifetime of the earner.
B)the appropriate time horizon for consumption theory is intergenerational.
C)the Barro-Ricardo equivalence theorem is correct.
D)it is true that higher taxes increase savings.

Question

Quizplus · Accepted Answer

The fact that a large majority of assets are bequeathed to heirs suggests that people are thinking intergenerationally when it comes to consumption and savings decisions. This aligns with the appropriate time horizon for consumption theory being intergenerational, as stated in option B. The other options are not necessarily supported by this fact.

The Fact That 80% of the Assets Accumulated During a Lifetime