In chapter 9 we learn there is a relationship between consumption (dependent variable) and disposable income (independent variable). If disposable income changes, then we move along the consumption function line to find a new level of consumption. If some other variable changes that impact the relationship (other than income) the entire line shifts. One of these variables that can shift the line is expectations.
The University of Michigan surveys hundreds of households every month to gauge their confidence in the economy.
For your essay: Describe the trend(s) in consumer confidence. From your own personal point of view, discuss YOUR current take (confidence) on the economy. Has it impacted your spending (consumption) and your savings habits? Why or why not? Perform some research, briefly report on the Paradox of Thrift, and tie it into your essay on confidence and saving. (be certain to use your own words and to include the link) And then reply to two students’ essays.