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Question
Which of the following best explains why younger individuals have a high level of spending fueled by borrowing?
a. The future seems uncertain, and younger people decide to spend in the present in case later opportunities are limited.
b. Many are college graduates who took out loans to attend school, so younger people are more comfortable with the idea of borrowing for consumption.
c. The life-cycle wage pattern predicts income mobility for younger individuals and makes borrowing feasible for large purchases associated with living independently for the first time.
d. Most younger individuals are irresponsible with money, so the high levels of spending and borrowing are the product of irrational decision making.
e. Since younger individuals have the longest time until retirement, they are the least sensitive to increases in interest rates.
Answer
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Related questions
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