Which of the Following Is TRUE About the Lifecycle Theory

question 102

Multiple Choice

Which of the following is TRUE about the lifecycle theory of savings?

• A) People tend to save during the early years of their lifetimes,dissave during their prime working years,and borrow during their retirement years.
• B) People tend to borrow during the early years of their lifetimes,invest during their prime working years,and save during their retirement years.
• C) People tend to borrow during the early years of their lifetimes,save during their prime working years,and dissave during their retirement years.
• D) People tend to save during the early years of their lifetimes,borrow during their prime working years,and invest during their retirement years.

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Definitions:

Money Supply

The total amount of monetary assets available in an economy, including cash and deposits.

Price Level

The total economy’s current average pricing for goods and services produced.

Real GDP

Gross Domestic Product adjusted for inflation, representing the value of all goods and services produced over a specific period, measured in constant prices.

Aggregate Demand Curve

A curve depicting the total demand for all goods and services in an economy at various price levels, assuming all other factors remain constant.