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As a result of the wealth effect, a sudden increase in the value of stock will cause households that hold a significant amount of stock assets to_________.

Respuesta :

Answer:

Increase consumption and reduce saving.

Explanation:

Saving is that portion of revenue that may not be planned to spend on current consumption. The saving-income partnership is considered saving-function. Put it simply, saving purpose or tendency to save refers the saving level to level of income.

  • The role of spending is a connection between the total disposable income and actual usage.
  • It is meant as a concise overview of domestic behavior, reflecting the concept of smoothing use.
  • The consumer function is typically assumed to be upward-sloping, but it has a slope of less than one.

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