ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumers have large unpaid balances on their credit cards.
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Consumers’ wealth is increased by changes in the stock market.
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The government encourages consumers to increase their savings.
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Social security taxes are increased.
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Consumers believe they will not receive pay increases next year.
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Detailed explanation-1: -Higher incomes, lower interest rates, increasing wealth, and composition of wealth (liquid versus illiquid assets) may lead to increased consumer spending.
Detailed explanation-2: -under which of the following conditions would consumer spending most likely increase? consumers’ wealth is increased by changes in the stock market. crowding out is best described as which of the following? federal budget deficits occur when.
Detailed explanation-3: -The Wealth Effect: This says that a rise in the price level will make people who have money and other financial assets feel poorer. They then buy less, and the opposite is true if the price level were to fall-people would buy more.
Detailed explanation-4: -The aggregate demand curve tends to shift to the left when total consumer spending declines. 2 Consumers might spend less because the cost of living is rising or because government taxes have increased. Consumers may decide to spend less and save more if they expect prices to rise in the future.