Author Question: Macroeconomics (Read 52 times)


  • Guest
on: Dec 4, 2019
Think about your spending habits prior to college, during college, and what you expect after graduation.  How might your own financial decisions relate to the life-cycle theory of consumption?  Also consider how interest rates may affect your consumption choices.


  • Hero Member
  • Posts: 584
Reply #1 on: Dec 4, 2019
  • Best Answer
  • According to the life-cycle theory of consumption, consumption decisions are based on permanent income only. As a college student, I consume more than I did when I was a high school student because my permanent income now is higher than it was in high school. Assuming I find a job upon graduation, my consumption will in turn increase, while at the same time begin to accumulate my earnings (begin to save) and stop saving once I retire. Depending on the interest-rates, it may change my outlook when purchasing a house or when obtaining a loan for a business venture. If the interest is too high, regardless of the principal I put in, the monthly fees may be too much to curb the costs of running a business or building my home.

    Related Topics

    Need homework help now?

    Ask unlimited questions for free

    Ask a Question

    Did you know?

    Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

    Did you know?

    Essential fatty acids have been shown to be effective against ulcers, asthma, dental cavities, and skin disorders such as acne.

    Did you know?

    Certain chemicals, after ingestion, can be converted by the body into cyanide. Most of these chemicals have been removed from the market, but some old nail polish remover, solvents, and plastics manufacturing solutions can contain these substances.

    Did you know?

    Individuals are never “cured” of addictions. Instead, they learn how to manage their disease to lead healthy, balanced lives.

    Did you know?

    Patients should never assume they are being given the appropriate drugs. They should make sure they know which drugs are being prescribed, and always double-check that the drugs received match the prescription.

    For a complete list of videos, visit our video library