The life cycle effect characterizes a lifetime income profile in which income
a. tends to follow a seasonal pattern.
b. rises as a worker gains maturity and experience.
c. rises and falls in conjunction with the business cycle.
d. falls during the early years of market activity and peaks at retirement.
b
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According to the classical theory, the aggregate supply curve is
A) downward sloping. B) upward sloping. C) vertical. D) horizontal.
Economists refer to the series of induced increases in consumption spending that result from an initial increase in autonomous expenditures as the ________ effect
A) multiplier B) expenditure C) aggregate demand D) consumption
The real rate of interest equals 5% and the expected rate of inflation equals 2%. The nominal rate of interest equals
A) 2%. B) 3%. C) 5%. D) 7%.
A pharmaceutical company faces a price regulation where it cannot charge any higher than $5,000 for a lifesaving drug. The company knows that the patients put a high value on this product and are willing to pay up to $10,000 for it. The company decides
to sell the drug at $5,000 and receives another $5,000 from administration through their exclusive medical service providers. This is an example of a. Tying b. Bundling c. Exclusion d. Fraud, the company is not allowed to sell for any higher than the regulatory price