Question

Question 5: Q5 from textbook page 604 In the discussion of the life-cycle hypothesis in the text, income is assumed to be constant during the period before retirement. For most people, however, income grows over their lifetimes. How does this growth in income influence the lifetime pattern of consumption and wealth accumulation shown in the figure in the slide 21 of "Ch17 PT2" under the following conditions? 1. Consumers can borrow, so their wealth can be negative. 2. Consumers face borrowing constraints that prevent their wealth from falling below zero

Answer 1

the answer i give it to you is little long but will solve your all problems from life cycle hypothesis and also you can go through the diagrams for the answer you needed.
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