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Chapter 10: Q. bFCT (page 220)

Why do you suppose that economists generally and more interested in the Index of Consumer Sentiment's validity than they are in its reliability as a predictor?

Short Answer

Expert verified

The Index of Consumer Sentiment's validity than they're in its reliability as a predictor.

Step by step solution

01

Given Information

Consumer sentimentis also an idea borne out ofthe arena of behavioral economics at its modern-day (post–World War II) inception. They argued that economic processes result from human behavior—the motives, attitudes, and expectations of kinsmen influence their economic behavior.

02

Explanation

When those we hold in control of the performance of the economy cannot produce process and are mired in politics, there's little reason for consumers to be optimistic.

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Most popular questions from this chapter

In Figure 10-2, if the economy acquires a larger amount of capital goods in the current year, does a larger or smaller outward shift in the production possibilities curve result? Does the LRAS curve shift more or less far to the right? Why?

Continuing from Problem $10 - 2,$ suppose that the full-employment level of nominal GDP in the following year rises to $21.85$ trillion. The long-run equilibrium price level, however, remains unchanged. By how much (in real dollars) has the long-run aggregate supply curve shifted to the right in the following year? By how much, if any, has the aggregate demand curve shifted to the right? (Hint: The equilibrium price level can stay the same only if $L R A S$ and $A D$ shift rightward by the same amount.)

Suppose that there is a sudden rise in the price level. What will happen to economywide planned spending on purchases of goods and services? Why?

Assume that the position of a nation's aggregate demand curve has not changed, but the long-run equilibrium price level has declined. Other things being equal, which of the following factors might account for this event?

a. An increase in labor productivity

b. A decrease in the capital stock

c. A decrease in the quantity of money in circulation

d. The discovery of new mineral resources used to produce various goods

e. A technological improvement

Suppose that during a given year, the quantity of U.S. real GDP that can be produced in the long run rises from $17.9$ trillion to $18.0$ trillion, measured in base year dollars. During the year, no change occurs in the various factors that influence aggregate demand. What will happen to the U.S. long-run equilibrium price level during this particular year?

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