Asked by Adrian Badillo on Jun 04, 2024
Verified
How does consumer optimism or pessimism affect spending?
Consumer Optimism
The tendency of consumers to hold positive expectations about the overall economy or their personal financial situation.
- Comprehend the function of consumer assurance in economic dynamics.
Verified Answer
KE
Konnor ErdigeJun 05, 2024
Final Answer :
When people are pessimistic about their prospects and about the state of the economy, they tend to cut back their spending and take on less debt. On the other hand, when they are optimistic about the future, they tend to reduce the amount they save, take on more debt, and buy discretionary items. Thus, the overall savings rate is influenced by (1) consumers' pessimism or optimism about their personal circumstances cultural differences in attitudes toward saving.
Learning Objectives
- Comprehend the function of consumer assurance in economic dynamics.
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