Mario knows that,over the long run,it is in his best interest to save at least 10% of his paycheck for retirement.However,each time he receives his weekly paycheck of $1,000,he ends up spending it all and not depositing any into a retirement account.Mario has resolved to contact his employer's human resources department to set up a 401(k)work-sponsored retirement account where the 10% would be deducted automatically from his paycheck before it is issued to him each week.It is apparent from this information that Mario realized that:
A) his intertemporal decisions are inconsistent and he had to take action to make them consistent.
B) his intertemporal decisions are consistent and he had to take action to make them inconsistent.
C) it is better for him to handle sending money to a retirement account than to rely on his employer to send the money to a retirement account on his behalf.
D) he should not be saving for retirement after all because his short-run preferences to spend his entire paycheck are perfectly indicative of his long-run preferences.
E) he should not worry about the future anymore because it will take care of itself.

Question

Quizplus · Accepted Answer

Mario's actions suggest that he recognized that his current intertemporal decisions (spending all his paycheck instead of saving 10% for retirement) were inconsistent with his long-term goals. By taking action to set up a retirement account and automate his savings, he is making his intertemporal decisions consistent with his long-term goals.

Mario Knows That,over the Long Run,it Is in His Best