According to the Life-Cycle Model, People

question 174

Multiple Choice

According to the life-cycle model, people

• A)save when they are young in order to finance education and home purchases in middle age
• B)save when they are young in order to finance home purchases during their retirement years
• C)save when they are young and pay off debts when they are old
• D)borrow when they are young and save when they are older
• E)save when they are young and borrow when they are older

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Definitions:

Deadweight Loss

An economic inefficiency occurring when a market outcome does not maximize total surplus due to a distortion, like a tax or subsidy.

Tariff

A tax imposed by a government on imported goods, typically to protect domestic industries or to generate revenue.

Domestic Consumers

Persons or households in a nation acquiring goods and services for individual consumption.

Surplus

An excess of what is needed, often referring to goods, funds, or resources beyond what is used.