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Economics

Suppose that medical researchers discover a new drug which slows the aging process allowing the average life span in the United States to increase to 95 years of age. The lifecycle hypothesis suggests that

1) consumption spending would decrease since savings would rise to provide income for the longer retirement periods.

2) consumption spending would increase since lifetime income increases.

3) consumption spending would increase since estimates of permanent income would increase.

4) None of the other answers is correct since predicted future annual incomes may not change.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91870499

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