According to the Life-Cycle Hypothesis

question 52

Multiple Choice

According to the life-cycle hypothesis,

• A) consumption during retirement decreases at a greater rate than disposable income.
• B) consumption during working years increases at a greater rate than disposable income.
• C) saving during retirement decreases at a greater rate than disposable income.
• D) consumption and saving are smoothed out over a lifetime so they both change at the same rate as disposable income.

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Definitions:

Piaget's Theory

A theory of cognitive development that describes how children construct a mental model of the world.

Habituation

A psychological learning process wherein there is a decrease in response to a stimulus after being repeatedly exposed to it.

Repetitive Stimuli

Stimuli that are presented repeatedly, which can lead to various psychological effects such as habituation or sensitization.

Energy Conservation

The practice of reducing energy consumption through using less of an energy service and efficient energy usage.