According to the life-cycle hypothesis,as consumers get older ________.
A)the marginal propensity to consume out of wealth and income rise
B)the marginal propensity to consume out of wealth falls and the marginal propensity to consume out of income rises
C)the marginal propensity to consume out of wealth rises and the marginal propensity to consume out of income falls
D)the marginal propensity to consume out of wealth and income fall

Question

Quizplus · Accepted Answer

The life-cycle hypothesis suggests that as consumers age, they tend to save more and consume less out of their current income, leading to a rise in the marginal propensity to consume out of wealth (as they draw down savings) and a fall in the marginal propensity to consume out of income (as they prioritize saving for retirement).

According to the Life-Cycle Hypothesis,as Consumers Get Older ________