By the life-cycle hypothesis,a cyclical boom which causes inflation to accelerate and thus causes people to ________ the real value they estimate their wealth to represent,leads them to ________ the proportion of their current income devoted to consumption,which turns out to be a ________ influence on the economy.
A)lower,reduce,stabilizing
B)lower,increase,destabilizing
C)raise,increase,stabilizing
D)raise,reduce,stabilizing
E)raise,reduce,destabilizing

Question

Quizplus · Accepted Answer

By the life-cycle hypothesis, a cyclical boom which causes inflation to accelerate and thus causes people to lower the real value they estimate their wealth to represent, leads them to reduce the proportion of their current income devoted to consumption, which turns out to be a stabilizing influence on the economy.

By the Life-Cycle Hypothesis,a Cyclical Boom Which Causes Inflation to Accelerate