According to the Life-Cycle Model, the Average Propensity to Consume

question 26

Multiple Choice

According to the life-cycle model, the average propensity to consume does not fall as income increases in the long run because:

• A) wealth and income grow together.
• B) as income increases wealth decreases.
• C) saving is constant over the life cycle.
• D) wealth is constant over the life cycle.

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Definitions:

Oligarchy

Rule by the few.

Solitary Individuals

Solitary Individuals describes people who prefer to be alone or are isolated from others, often focusing on personal thoughts and experiences.

John Rawls

An American political philosopher in the liberal tradition, best known for his theory of justice as fairness, which emphasizes a system of cooperation and equality in political and social institutions.

Communitarian

One who holds a theory of society that emphasizes the interdependence of individuals within the context of particular communities. A communitarian view understands the citizen not in terms of his or her rights but rather his or her duties (“Ask not what your country can do for you, but what you can do for your country”). In the communitarian view, the self is sometimes understood as a function of society rather than an independent entity.