A fall in the price level would lead to an increase in consumption according to ________ because ________.
A)Friedman;the value of assets fall
B)Modigliani;the value of assets fall
C)Friedman;the value of assets rise
D)Modigliani;the value of assets rise

Question

Quizplus · Accepted Answer

According to Modigliani's life-cycle hypothesis, a fall in the price level increases the real value of assets, leading to an increase in consumption as people feel wealthier.

A Fall in the Price Level Would Lead to an Increase