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Consider the determinants of aggregate demand and aggregate supply. Which determinant can you identify...?

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Consider the determinants of aggregate demand and aggregate supply. Which determinant can you identify...?

Postby rexford » Mon Apr 15, 2013 12:07 pm

NEW YORK - Although consumer spending in the U.S. has been flat for some months now, some encouraging signs are appearing. The Consumer Confidence Index from the University of Michigan has improved for the third straight month. And the Commerce Department’s Index of Leading Indicators has also increased. The recent housing slump, while serious, has finally seemed to stabilize. Both home sales and average home prices have increased slightly over the past three months stimulated by continued low interest rates. Orders for durable goods finally turned positive last month after a year long decline. The Fed has recently reduced the Federal Funds interest rate to 1.0%, and 30-year mortgage rates have dropped slightly as financial market confidence returns. Combined with modest stock market gains, consumers seem more willing to spend. The civilian unemployment rate, while still high, has decreased slightly over the past two months.


1. Consider the determinants of aggregate demand and aggregate supply. Which determinant can you identify as being impacted by the recent economic outlook?
a. The rate of inflation
b. Consumer expectations
c. Resource prices
d. Taxes

2. Given the interest rate changes discussed in the article above, other things being equal, what could you predict about business investment spending?
a) It would likely decrease.
b) It would likely increase.
c) It would likely remain unchanged.
d) Any change would depend upon further changes in GDP, not interest rates.
rexford
 
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