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Question: consider the following statement consumer spending accounts for roughly twothirds...

Question details

Consider the following statement.

“Consumer spending accounts for roughly two-thirds of our economy. When consumers are reluctant to spend, our economy is affected and when they open their pocket books, the economy moves.”

(a) Given the models of expectations, how can we interpret the above statement?

(b) Does it matter why consumers maybe reluctant (or willing) to spend?

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