Question 1: What impact would you expect increases and decreases in house value to have on the consumption behavior of house owners? Explain.
Question 2: Explain why a household's consumption and labor supply decisions are interdependent. What impact does this interdependence have on the way in which consumption and income are related?
Question 3: How can a firm maintain a smooth production schedule even when sales are fluctuating? What are the benefits of a smooth production schedule? What are the costs?