An Increase in the Consumer Sentiment Index Indicates That Consumers

question 183

Multiple Choice

An increase in the consumer sentiment index indicates that consumers are

• A) becoming more optimistic about their future income and employment prospects.
• B) becoming less optimistic about their future income and employment prospects.
• C) expecting the inflation rate to rise in the near future.
• D) expecting the inflation rate to fall in the near future.

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Definitions:

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as wages, rent, and materials.

Implicit Costs

The opportunity costs that are not directly paid for or incurred in transactions but represent real costs to a business.

Implicit Costs

refer to the opportunity costs that occur when a company uses internal resources that could have been used for another purpose but do not directly affect cash flow.