The Life-Cycle Model of Consumption and Saving Focuses on

question 48

Multiple Choice

The life-cycle model of consumption and saving focuses on

• A)the tendency of young consumers to purchase fashionable or trendy goods.
• B)the tendency of older people to be very reluctant to spend.
• C)the pattern of using the financial system to match saving with consumption needs.
• D)the reluctance of most Americans to save for retirement.

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Definitions:

Available-for-Sale

Available-for-sale refers to financial assets that are not classified as held-for-trading or held-to-maturity, and are recorded at fair value with changes recognized in other comprehensive income.

Market Values

The current price at which an asset or service can be bought or sold in a competitive marketplace.

Unrealized Increase/Decrease

Refers to the change in value of an investment that has not been sold, affecting the company’s balance sheet but not its income statement.

Trading Securities

Financial instruments that are purchased by a company not for long-term investment but rather with the intention to trade in the short term for profit.