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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

Take a look at the panel (b) of Figure 10-8. What change in the position of the aggregate demand curve could generate inflation-that is, an increase in the equilibrium price level? What type of variation in the quantity of money placed into circulation by the Federal Reserve could generate such a change in the position of the aggregate demand curve?

Why might a return of the U.S. population growth rate to its prior level also tend to boost the growth of U.S. Long-run aggregate supply? (Hint: Recall that real GDP growth is generated by the contributions of growth in labour and capital and growth in productivity of these resources.)

Explain whether each of the following events would cause a movement along or a shift in the position of the L.RAS curve, other things being equal. In each case, explain the direction of the movement along the curve or shift in its position.

a. Last year, businesses invested in new capital equipment, so this year the nation's capital stock is higher than it was last year.

b. There has been an 8 percent increase in the quantity of money in circulation that has shifted the ADcurve.

c. A hurricane of unprecedented strength has damaged oil rigs, factories, and ports all along the nation's coast.

d. Inflation has occurred during the roast year as a result of rightward shifts of theAD curve.

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

Take a look at the panel (a) of Figure 10-6. In the absence of a change in aggregate demand, what effect does economic growth have on the price level over time, other things being equal? Why?
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