Wednesday, August 5, 2009

What are the effects of a "loss of consumer confidence"(decline in the consumer confidence

What are the effects on: 1)equilibrium real interest and output, 2)unemployment rate, 3)level of investment, 4)price level, 5)nominal wage and 6)real wage



In the Short run and the medium run



include source where I can find diagrams...



thanks a lot



What are the effects of a %26quot;loss of consumer confidence%26quot;(decline in the consumer confidence index)?loans uk





The index of loss of consumer confidence, in my experience, is always a very ephemeral and easily manipulated statistic.



It gets released somewhere in the middle of periodic reporting, usually right after the initial burst of what are often exaggerated and misleading reports, and before the adjusted findings that are usually more honest and critical to the observer of the market. I think no one takes the statistic seriously.



There%26#039;s a lot of items consumers HAVE to pay for, from rent to food, and a loss of confidence doesn%26#039;t impact much on that, though it might lead to frugality. As far as impacting on other goods... tvs, vcrs, computers, whatever, that are not critical and necessary to a person, I have yet to see that it does much to reduce prices or put a damper on production.



Periodically, usually in synch with the release of the next release of such commodities (ever more gigatic boob tubes, tinier more intricate ipods --whatever), those prices go down as the overstock needs to be sold off. But since those products are actually very cheap to produce in the first place, and sell dear no matter what, there is no real loss to manufacturers.



More worrisome to manufacturers is when a felt-need product itself falls out of favor, that is the felt need become unfelt. We saw this with giant SUV%26#039;s. That%26#039;s when people lose their jobs and companies producing these goods belly-up.



What are the effects of a %26quot;loss of consumer confidence%26quot;(decline in the consumer confidence index)?

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just from common sense - output down, employment down, real wage down



you gotta use a specific model for monetary values, they all give different predictions.

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