Q1. Expectations and consumer confidence are important in determining fluctuations in aggregate spending. In your opinion, what is the present status of consumer confidence? Do you think consumers are pessimistic or optimistic? Briefly discuss.
Q2. How would an increase in each of the following affect the consumption function? How would it affect the saving function?
a. Autonomous net taxes
b. The interest rate
c. Consumer optimism or confidence
d. The price level