Permanent income hypothesis or the life cycle theory of consumption describes how individual maximize his/her lifetime utility by smoothing out the consumption thorough out time. This required the reallocation of wealth throughout an individual’s lifetime.
Instructions for Essay:
The following must answered in the essay:
Is life-cycle consumption (permanent income hypothesis) model persistent with your believes, and what have you observed? Compare the model with reality on how do we make our decisions in our daily life. You are encouraged to post anything here including your thoughts, questions, and suggestions regarding the class topics
