According to the life-cycle model,
A)richer economies save about the same fraction of disposable income as do poor countries
B)people spend much of their income when young, and borrow to finance retirement when they are older
C)rich countries save a higher fraction of disposable income than do poor countries
D)richer economies save less than do poor economies
E)the saving rate in all nations increases over time

Question

Quizplus · Accepted Answer

The life-cycle model suggests that individuals plan their consumption and savings behavior over their lifetime, aiming to smooth consumption. It implies that the saving rate is not necessarily higher in richer economies compared to poorer ones, as people save to maintain their consumption levels in retirement, regardless of the country's wealth.

According to the Life-Cycle Model