ECO 1304 Chapter Notes - Chapter 8: Consumption Function, Disposable And Discretionary Income, Consumer Spending
Document Summary
One method to do this is to reduce taxes. In 2001, tax cuts were enacted in both canada and the united states. These cuts were successful in avoiding a recession in canada but not in the. It seems canadian consumers understood very well that tax cuts were here to stay, and spent their extra (after-tax) income. In the united states, americans understood the tax to be temporary, and as. Chapter 8- the circular flow of spending & the powerful consumer. In chapter 5, we suggested the government sometimes may want to shift the ad curve. a consequence, saved a substantial share of their tax cuts, rather than spending them. Aggregate demand (ad) = the total amount that all consumers, business firms, and government agencies are willing to spend on final goods and services. Consumer expenditure (c) = the total amount spent by consumers on newly produced goods and services (excluding purchases of new homes, which are considered investment goods).
