According to the NBC Learn clip Consumer Confidence Hits Five-Year High, how does optimism and certainty about the economy affect consumer spending? Synthesizing the concepts of consumer confidence and aggregate demand, describe how spending can bring an economy out of a recessionary gap and whether increased spending is justified even if incomes don’t keep up.
For this discussion question, I want you to answer it in three paragraphs, a), b), and c).
For paragraph a), explain what you think the headline "U.S. consumer spending up 0.4 percent in January while income increased 0.3 percent" means. For paragraph
b) explain how the NBC Learn clip concerning optimism and certainty affect aggregate demand and hence, consumer spending. Make sure you say how the aggregate demand curve would shift for both optimism and pessimism in the economy. For paragraph
c) explain how a recessionary gap can be reduced based on what you learned from the video clip and is increased spending by consumers and the government warranted even if consumers income is less than their spending. You need to describe how the aggregate demand and aggregate supply model is affected by the changes above to reduce the recessionary gap.