1. A decrease in consumer wealth occurs due to a plunge in stock prices.
2. Households and businesses have more optimistic expectations regarding future economic performance.
3. There are higher levels of investment spending by
4. 1. Labor productivity increases in the macroeconomy.
5. Hurricane Sandy destroys a significant amount of infrastructure in the North East region of the USA.
6. In order to close the budget deficit, the government increases taxes for households and businesses.
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.1. A decrease in consumer wealth occurs due to a plunge in stock prices.
The wealth effect will reduce the aggregate consumption, which identically shifts the short-run aggregate demand curve and left (up)....