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Economics

1.In October 2008, Canadian consumer confidence plunged to levels last seen in the 1982 recession. According to some economic analysts, the global credit crunch and major stock market declines appear to have had an effect on Canadian consumer confidence.

a. describe the various factors that weigh down consumer confidence in 2008.

b. describe, and draw a graph to illustrate, how declining consumer confidence can change real GDP and the price level in the short run.

c. If the economy was operating at full-employment equilibrium, what is the state of equilibrium after the fall in consumer confidence? In what way might consumer expectations have a self-fulfilling prophecy?

d. Why do changes in consumer spending play such a large role in the business cycle?

e. describe how the economy can adjust in the long run to restore full-employment equilibrium. Draw a graph to illustrate this adjustment process.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M946401

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