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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鈥揥orld War II) inception. They argued that economic processes result from human behavior鈥攖he 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

Continuing from Problem 10-2,suppose that the full-employment level of nominal GDP in the following year rises to 21.85trillion. 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 LRAS and AD shift rightward by the same amount.)

Has China's production possibilities curve been shifting outward or inward were the past 40years? Explain your answer

Assume that the economy is in long-run equilibrium with complete information and that input prices adjust rapidly to changes in the prices of goods and services. If there is a rise in the price level induced by an increase in aggregate demand. what happens to real GDP?

Consider Figure 10-4. What are the three effects of decreases in the price level, and do these generate upward or downward movements along the economy's aggregate demand curve?

This year, a nation's long-run equilibrium real GDP and price level both increased. Which of the following combinations of factors might simultaneously account for botb occurrences?

a. An isolated earthquake at the beginning of the year destroyed part of the nation's capital stock, and the nation's government significantly reduced its purchases of goods and services.

b. There was a technological improvement at the end of the previous year, and the quantity of money in circulation rose significantly during the year.

c. Labor productivity increased throughout the year, and consumers significantly increased their total planned purchases of goods and services.

d. The capital stock increased somewhat during the year, and the quantity of money in circular. tion declined considerably.
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