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 Course notes quick navigation

1 Introductory concepts 2  Market mechanism  3 Elasticities  4 Market structures 5  Market failures  6  Macro economic activity/eco growth  7 Inflation 8  Employment & unemployment  9  External Stability  10  Income distribution 11.Factors affecting economy  12  Fiscal/Budgetary policy  13  Monetary Policy   14 Aggregate Supply Policies  15 The Policy Mix

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Consumer confidence


Consumer confidence refers to a consumers' perception of their economic well being in the future.  Consumer confidence is negatively affected by economic conditions such as:



When confidence is high, it contributes to upward pressure on Consumption expenditure, higher AD and increased economic growth.  this is likely to exert upward pressure on inflation and make low inflation more difficult to achieve, as well as contribute to a higher demand for labour, growing employment and a lower unemployment - assisting with the full employment goal.  With more employment and lower unemployment, it should make the the distribution of income more equitable as there is less reliance on welfare.  With respect to the impact on the achievement of external stability, the stronger AD (and higher inflation) that results from a higher level of consumer confidence is also likely to place upward pressure on the CAD and NFD, as it contributes to growth in spending (GNE) outstripping growth in income and production (GDP) - or in simple terms, greater spending on imports.  This should have a negative effect on the balance of trade and the CAD, resulting in an increase in net foreign liabilities (either NFD or NFE).

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