The Next Questions Refer to the Following

question 32

Multiple Choice

The next questions refer to the following.
Consider an individual who enters adulthood and the labor force at age 18, expects to work 5 years at a real income of $10,000 per year, anticipates earning a real income of $40,000 per year from age 23 to 63, expects to retire with a $10,000 annual pension, and live until age 78. Suppose the interest rate is zero, and the individual seeks perfectly smooth consumption across his adult lifetime.
-In the absence of borrowing constraints,then beginning at age 18,the individual should consume

• A) all of his income as he receives it each year
• B) $10,000 every year
• C) $20,000 every year
• D) $30,000 every year
• E) $25,000 every year

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Definitions:

Stay-at-Home Dad

A father who chooses to stay at home to care for his children and manage household tasks while his partner works outside the home for income.

Competitive Breadwinner

An individual who strives to be the primary or sole financial provider for their family, often driven by societal expectations or personal ambition.

Trailing Spouse

A person who relocates to support their partner's career or educational pursuits, often facing challenges in employment and social integration.

Dual-Career Spouse

A situation where both spouses or partners have careers and work outside the home, often leading to challenges in balancing work and family life.