Question

Each of the scenarios depicts a situation that will result in some sort of demand shock. After reading each scenario, please determine whether the associated demand shock will be positive or negative. After several weeks of economic instability, the Swedish stock market begins to quickly decline as consumers lose confidence in the economy. After several years of rapid growth, the housing market begins to lose value, and consumers scale back their spending in response. The Canadian government passes a tax cut of 4% for all citizens, resulting in an increase in their disposable income. The British government institutes a new public housing program which aims to build 3 million new apartment units across the United Kingdom. The introduction of the program dramatically increases the government's demand for raw materials and building supplies. A period of sustained economic decline, major companies in both the automobile and textile industries in Canada begin to lay off workers and close factories, citing loss of confidence in the ability of the Canadian government to properly manage the economy.

Answer 1

Answer:

a) Decline in the shopper certainty is negative interest stun that will move the interest bend to one side.  

b) shopper diminishing their use is a case of the negative interest stun.  

c) An expansion in the extra cash is certain interest stun.  

d) Increase in the administration buys is a case of positive interest stun.  

e) This is a case of the negative interest stun.