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Unformatted text preview: Question 2. A. What is the primary determinant of consumption spending? Give an example of a consumption function. B. Consumer con²dence ³ a measure of how good consumers ex-pect the economy to be in the future ³ declined in February. All else constant, what e/ect should the decline in consumer con²dence have on consumption spending? What e/ect should it have on household saving? Explain. 3 MIDTERM EXAMINATION #1 (Fall 2001) 1. After the September 11 attack, thousands of passengers cancelled already-booked airline tickets and tens of thousands more cancelled plans to purchase airline tickets in the next few months. All of the major airlines announced ´ight cancellations and layo/s of airline employees. 1 Boeing, a manufacturer of airplanes, also announced layo/s. Are the lay-o/s at Boeing a &multiplier e/ect±of the cancellations of airline travel? Explain. 2...
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- Fall '08
- Macroeconomics, Midterm Examination, airline tickets, consumption spending