Because Consumer Beliefs About What the Future Holds Is Such

question 48

Multiple Choice

Because consumer beliefs about what the future holds is such an important determinant of how much they will pump into the economy when making discretionary purchases, many companies take forecasts about intended spending seriously and have surveys conducted to measure:

• A) consumer confidence.
• B) economic health.
• C) consumer purchase behaviour.
• D) discretionary spending.

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Definitions:

Substitution Effect

A change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with less expensive ones.

Price of Labor

The wage rate or compensation given to workers for their labor services, typically influenced by the supply and demand for labor in the market.

Output Effect

The output effect describes how changes in price can affect the quantity of goods or services produced by firms, often related to the concepts of supply and demand.

Technological Improvement

Enhancements or advancements in technology that increase productivity, efficiency, or quality in the production of goods and services.