Is the given news encouraging for economic growth

Reference no: EM131530655

Question: The Conference Board publishes the Consumer Confidence Index (CCI) every month based on a survey of 5,000 representative U.S. households. It is used by many economists to track the state of the economy. A press release by the Board on June 28, 2011, stated: "The Conference Board Consumer Confidence Index, which had declined in May, decreased again in June. The Index now stands at 58.5 (1985 = 100), down from 61.7 in May."

a. As an economist, is this news encouraging for economic growth?

b. Explain your answer to part a with the help of the AD-AS model. Draw a typical diagram showing two equilibrium points (E1) and (E2). Label the vertical axis "Aggregate price level" and the horizontal axis "Real GDP." Assume that all other major macroeconomic factors remain unchanged.

c. How should the government respond to this news? What are some policy measures that could be used to help neutralize the effect of falling consumer confidence?

Reference no: EM131530655

Questions Cloud

Assess the organizational culture in which the manager work : Assess the organizational culture in which this manager works, including how the culture might be impacting employee performance in the manager's area.

Discuss the role this open source software has in mis : Research an open source software project.create a presentation with slides that describe the open source software and how it works.

What was the effect of the two shocks on real gdp : There were two major shocks to the U.S. economy in 2007, leading to the severe recession of 2007-2009. One shock was related to oil prices.

Explain at least three direct costs and three indirect costs : Discuss at least three direct costs and three indirect costs that each company incurred during the production of its navigation system.

Is the given news encouraging for economic growth : The Conference Board publishes the Consumer Confidence Index (CCI) every month based on a survey of 5,000 representative U.S. households.

What fiscal or monetary policies can the government use : In the accompanying diagram, the economy is in longrun macroeconomic equilibrium at point E1 when an oil shock shifts the short-run aggregate supply curve.

Identify ratio that reveals some quantified fact or trend : Each factor that you identify below must include a %, #, $ or ratio that reveals some quantified fact or trend.

Describe the security methods and controls : Describe the security methods and controls that need to be implemented in order to ensure compliance with these standards and regulatory requirements.

Is albernia facing a recessionary or inflationary gap : The accompanying diagram shows the current macroeconomic situation for the economy of Albernia.

User Account

All Pages