2. List four factors that could shift the consumption schedule except disposable income. Shifts in the consumption schedule could be caused by any of the non-income determinants of consumption and saving. This includes changes in any of the following: а) b) c) d) When wealth increases, it shifts the consumption schedule ( upward , downward ) as people consume more at each level of disposable income. There is an opposite effect on saving. The saving schedule shifts ( upward, downward ) at each level of disposable income because people save less. ) effect occurs when there is a significant drop in consumer wealth that A(r_ will shift the consumption schedule downward. During the Great Recession of 2007–2009 there was a "reverse wealth effect" because as wealth declined during the recession, people consumed less and saved ( more, less ). Such a situation creates a paradox of thrift in which more saving helps individual household budgets, but as people cut back on their consumption and (increase, decrease_) their saving, the collective effect on the economy is an adverse one that worsened the recession. W
2. List four factors that could shift the consumption schedule except disposable income. Shifts in the consumption schedule could be caused by any of the non-income determinants of consumption and saving. This includes changes in any of the following: а) b) c) d) When wealth increases, it shifts the consumption schedule ( upward , downward ) as people consume more at each level of disposable income. There is an opposite effect on saving. The saving schedule shifts ( upward, downward ) at each level of disposable income because people save less. ) effect occurs when there is a significant drop in consumer wealth that A(r_ will shift the consumption schedule downward. During the Great Recession of 2007–2009 there was a "reverse wealth effect" because as wealth declined during the recession, people consumed less and saved ( more, less ). Such a situation creates a paradox of thrift in which more saving helps individual household budgets, but as people cut back on their consumption and (increase, decrease_) their saving, the collective effect on the economy is an adverse one that worsened the recession. W
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 1.1P
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