The life-cycle theory of consumption predicts that when a person anticipates a higher income in the future, then that person will
A)consume more and save less in the current period.
B)consume less and save more in the current period.
C)consume less and save less in the current period.
D)not change the amount of consumption or saving in the current period.

Question

Quizplus · Accepted Answer

The life-cycle theory of consumption suggests that individuals plan their consumption and savings behavior over their lifetime. If they anticipate higher income in the future, they are likely to consume more now, smoothing their consumption over time.

The Life-Cycle Theory of Consumption Predicts That When a Person