Which of the following is a characteristic of the 'Life-Cycle Hypothesis' of consumption?
A. Consumption depends only on current income
B. Saving is independent of age
C. Individuals plan consumption over their entire lifetime
D. Only permanent income matters and age is irrelevant
Answer: Option C
Solution (By JKSSB Mock Tests)
The life-cycle hypothesis, associated with Modigliani, posits that individuals smooth consumption over their lifetime by saving during working years and dissaving during retirement.
Explanation:
The zero lower bound refers to the constraint that nominal interest rates cannot be reduced much below zero, limiting the effectiveness of conventional monetary policy in deep recessions.
Explanation:
GST is a destination-based consumption tax that allows seamless input tax credit, thereby eliminating cascading and creating a unified market.
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