Question

In: Economics

Question 2: As you have learned consumer expectations are a major driver of the short run...

Question 2: As you have learned consumer expectations are a major driver of the short run path of the economy. Consumer spending account for about 70% of GDP and consumer confidence is a major factor in shifting Aggregate Demand. Describe how your expectations about the economy have changed as a result of COVID-19. How are you changing your spending patterns during this pandemic? How will you and your family spend any additional direct payments from the federal government if/when new legislation is passed? Do you expect consumer confidence and business expectations to improve in the months ahead? Which way will the AD curve shift during the fourth quarter (October through December)? Explain your reasoning.

Solutions

Expert Solution

Due to Covid 19, the economy is in nothing short of a recession right now.

I expect that the economy will further go down unless and untill we find a vaccine. Till then buisnesses will be shut, consumer spending will not rise.

Due to the pandemic, I have stopped eating from restaurants due to fear of getting infected.

I do not go shopping every 2 weeks as I went before.

I always think before I buy something now. I check whether it is needed or not.

If me and my family gets any additional direct payments, we wil try to save a major part of the payment, as the times are unpredictable.

Consumer confidence will get a boost only if a vaccine is developed. Till then I expect it to be very low.

October to December is a time of festivals. Due to this people might spend more but not upto the level of last year's October to december.

AD might get a little shift up. Since Spending might get an increase, however it wont be enough to boost the economy.


Related Solutions

Question: Costs in the short run versus in the long run Ike’s Bikes is a major...
Question: Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Cu... Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses...
Some have said that the short-run keynesian model with flexible wages and adaptive expectations is not...
Some have said that the short-run keynesian model with flexible wages and adaptive expectations is not consistent with a downward-sloping phillips curve. Are they right or wrong? Please explain and diagrammatically represent your answer
Question 1. What is the difference between the short-run and the long-run? Question 2. Explain the...
Question 1. What is the difference between the short-run and the long-run? Question 2. Explain the concepts of shocks in aggregate demand and aggregate supply. Question 3. What is stabilization policy? Question 4. Explain the impact of an increase in the money supply in the short-run and in the long run Question 5. Which of the following changes would contribute to a decline in the index of leading indicators suggesting that a recession is more likely? a. A rise in...
Identify the major differences between short-run and long-run employment?
Identify the major differences between short-run and long-run employment?
You as a consumer of healthcare have certain expectations when utilizing health facilities. In addition to...
You as a consumer of healthcare have certain expectations when utilizing health facilities. In addition to receiving a friendly greeting, what are your expectations pre-service, point of service and after-service? What factors would discourage you from using a healthcare facility in your community?
Expectations play an important role in macroeconomic analysis. Consumer and business confidence are major drivers of...
Expectations play an important role in macroeconomic analysis. Consumer and business confidence are major drivers of the economy in the short run. Describe how your expectations about the future of the economy have changed as a result of Covid-19. How are you changing your spending patterns during this crisis? How has the Coronavirus pandemic affected your plans for the future? Have you reevaluated your educational and/or transfer plans? Your career choices? Investment strategies? Are you concerned by the large deficits...
5. Costs in the short run versus in the long run Ike’s Bikes is a major...
5. Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of...
5. Costs in the short run versus in the long run Ike’s Bikes is a major...
5. Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of...
5. Costs in the short run versus in the long run Ike’s Bikes is a major...
5. Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of...
Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer...
Costs in the short run versus in the long run Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT