Use the ZZ-Y model presented in chapter 3 to illustrate the effects of a reduction in consumer confidence on the economy. Also, explain what effect this reduction in consumer confidence has on the economy
What will be an ideal response?
The graph is easy. The reduction in consumer confidence will cause a reduction in consumption and demand. As demand falls, firms will cut production. So, this event will cause a lower level of equilibrium output.
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If the Federal government expands its support of education and retraining of workers who have been unemployed for a relatively long length of time, which type of unemployment would the education and retraining most likely be targeted?
A) discouraged B) cyclical C) structural D) frictional E) government
A rise in the price level changes aggregate demand because
A) firms increase their investment when prices are higher. B) the real value of people's wealth varies directly with the price level and so does their spending. C) the real value of people's wealth decreases and so they decrease their consumption. D) the more money people have, the more it is worth and hence the more goods and services they demand.
As price rises, quantity demanded ___________.
Fill in the blank(s) with the appropriate word(s).
Consider the following data for a nation.YearNominal GDPPrice Index1$3590240100345110448120556140The country's real GDP declined between years
A. 1 and 2. B. 2 and 3. C. 3 and 4. D. 4 and 5.