Life-cycle hypothesis The theory of consumption that emphasizes the role of saving and borrowing as transferring resources from those times in life when income is high to those times in life when income is low, such as from working years to retirement
⚫ Life-cycle hypothesis The theory of consumption that emphasizes the role of saving and borrowing as transferring resources from those times in life when income is high to those times in life when income is low, such as from working years to retirement
●Precautionary saving(预防性储蓄) The extra saving that results from uncertainty regarding, for example,.longevity(寿命)or future income. ●Permanent-.income hypothesis(特久收入假设) The theory of consumption according to which people choose consumption based on their permanent income,and use saving and borrowing to smooth consumption in response to transitory variations in income
⚫ Precautionary saving (预防性储蓄) The extra saving that results from uncertainty regarding, for example, longevity(寿命)or future income. ⚫ Permanent-income hypothesis (持久收入假设) The theory of consumption according to which people choose consumption based on their permanent income, and use saving and borrowing to smooth consumption in response to transitory variations in income
●Permanent income Income that people expect to persist(持续，存留)into the future; normal income. ●Transitory income(暂时收入) Income that people do not expect to persist into the future; current(现期)income minus normal income
⚫ Permanent income Income that people expect to persist(持续,存留)into the future; normal income. ⚫ Transitory income (暂时收入) Income that people do not expect to persist into the future; current (现期) income minus normal income
figure 16-1 Consumption,C C=C+cY APC The Keynesian Consumption Function Income,Y
The Keynesian Consumption Function
This figure graphs a consumption function with the three properties that Keynes conjectured. First,the marginal propensity to consume c is between zero and one. Second,the average propensity to consume falls as income rises. Third,consumption is determined by current income
This figure graphs a consumption function with the three properties that Keynes conjectured. First, the marginal propensity to consume c is between zero and one. Second, the average propensity to consume falls as income rises. Third, consumption is determined by current income