CAS MA 120 Quiz: EC171 Vocabulary and Notes.docx
27 Oct 2014
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Life cycle consumption smoothing: smoothing refers to the need to spread your economic resources over your lifetime taking into account that your future is highly uncertain, model takes the facts about a households composition resources, and fixed obligations as input data and then calculates the households sustainable standard of living, household composition the number of adults and children in the household and their ages, resources the assets owned by the household, and the expected incomes to be received by the household in the future, fixed obligations include contractually obligated payments, ex: student loans, taxes, housing payments, and insurance premiums, outcome variable of the life cycle model is the households smooth and sustainable standard of living per adult, which can be sustained until the maximum age of life, sustainable standard of living measure of the spending on all goods and services that a household can afford until its maximum age of life (ex:
