Which of the following is a characteristic of the 'Life-Cycle Hypothesis' of consumption?
A. Consumption depends only on current income
B. Only permanent income matters and age is irrelevant
C. Individuals plan consumption over their entire lifetime
D. Saving is independent of age
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.
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