If Consumers Want Consumption to Be as Constant as Possible

question 27

Multiple Choice

If consumers want consumption to be as constant as possible over their life cycles and income rises gradually over their periods of employment, then if borrowing constraints prevent their wealth from falling below zero:

• A)they can achieve constant consumption by borrowing.
• B)their consumption in retirement will be higher than it was in earlier parts of the life cycle.
• C)their consumption during their younger years will be lower than it will be in later parts of the life cycle.
• D)their consumption during their later working years will be higher than it was or will be in other parts of

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Definitions:

Objective Reality

The state or quality of being true and existent outside of personal perceptions, interpretations, feelings, or biases.

Positivism

A philosophical approach that asserts that knowledge should be derived from empirical and observable evidence.

Theoretical Approach

A systematic way of thinking about and analyzing a phenomenon, guided by a set of concepts and propositions.

Urban-Rural Differences

The varying characteristics, lifestyles, and social and economic conditions that distinguish urban areas from rural areas.