What effect do you think the increase in savings had on overall consumption? Given that consumers (like you) purchase goods and services for consumption 70 percent of the time in the United States, how do you think the increase in savings affected aggregate expenditure?
When the economy enters a slump (as it did most recently in 2008), consumption in the United States falls.
Do you think you’d change your consumption habits/choices if the economy went into a slump but you weren’t directly affected? Do you recall if you or your family’s spending habits changed at all during or after the 2008 recession? If you don’t remember what happened during the recession, you might want to ask someone (a family member, friend, or whomever) about their memories and decisions. Feel free to talk about any of these.
Following the 2008 recession, the rate of savings in the United States more than doubled. What makes you think this is the case? What effect do you think the increase in savings had on overall consumption? Given that consumers (like you) purchase goods and services for consumption 70 percent of the time in the United States, how do you think the increase in savings affected aggregate expenditure? Please answer these questions based on your knowledge of the aggregate expenditure model.
