Consider Two Households That Are at the Same Stage in Their

question 54

Essay

Consider two households that are at the same stage in their life cycle and have similar expectations about future wage rates, prices, and so on. They expect to live the same length of time, and both plan to leave the same amount to their children. They differ only in their wealth. Because of a past inheritance, household 1 has more wealth than household 2. Which household is likely to have a higher consumption path for the rest of its life?

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Definitions:

Due Process Clause

Constitutional guarantees that ensure fair treatment through the normal judicial system, especially as a citizen's entitlement.

Fourteenth Amendment

An amendment to the U.S. Constitution granting citizenship to all persons born or naturalized in the United States, including formerly enslaved people, and guaranteeing all citizens “equal protection of the laws.”

Bill Of Rights

The first ten amendments to the United States Constitution, guaranteeing certain rights and freedoms to American citizens.

States

Politically organized territories with defined geographic boundaries, governed by a set of laws under a sovereign government.