Economist Franco Modigliani's Lifecycle Theory of Savings Proposes That in Order

question 38

Multiple Choice

Economist Franco Modigliani's lifecycle theory of savings proposes that in order to maximize lifetime satisfaction,consumers:

• A) practice consumption smoothing by borrowing and saving.
• B) borrow equal amounts throughout the life cycle.
• C) save equal amounts throughout their life cycle.
• D) consume what they earn each year.

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Definitions:

Liquidate

The process of converting assets into cash or other forms of payment, often used in the context of dissolving a business or paying off debts.

Compulsory Share Exchange

A corporate action where a company's shares are acquired in exchange for shares of the acquiring company, typically mandating that all shareholders participate.

Merge

To combine or unite multiple entities, such as companies or datasets, into one integrated whole.

Short-form Merger

A short-form merger is a type of merger that allows a parent company to absorb a subsidiary without the approval of the shareholders of the subsidiary.