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

question 99

Multiple Choice

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

---

Definitions:

Bonds Redeemed Early

The process by which an issuer repays the principal amount of bonds before their maturity date.

Redemption Price

The amount paid to redeem a security or investment, often found in the terms of bonds or preferred stock.

Carrying Value

The book value of assets and liabilities as presented on a company’s balance sheet, which is the original cost minus any depreciation, amortization, or impairment costs.

Secured Bonds

Bonds that have specific assets of the issuer pledged as collateral.