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Suppose that an increase in consumer confidence raises consumers expectations about their future income and thus increases the amount they want to consume today. Suppose that an increase in consumer confidence raises consumers expectations about their future income and thus increases the amount they want to consume today.
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If a 10-percent increase in both capital and labor causes output to increase by less than 10 percent the production function is said to exhibit decreasing returns to scale.
The government raises taxes by 100 billion. 3 when government spending increases without a change in taxes. Suppose that an increase in consumer confidence raises consumers expectations about their future income and thus increases the amount they want to consume today. Suppose that increased consumer confidence leads to an increase. This might be interpreted as an upward shift in the consumption function. This might be interpreted as an upward shift in the consumption function.
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