How does confidence effect the economy?

particularly between economic groups

Answer:
From a macro perspective confidence is imperative in the effective functioning of an economy. If we the public do not have confidence in the people making the decision i.e Central Bankers then there is excess volatility leading to fluctuation in inflation expectations causing the interest rate to move in response which has a whole host of repercussions.
If workers believe that employers will pay them fairly, then they are more productive because they spend less time looking for other jobs and sucking up for raises. (Read Harvard Business Reviews piece on why individual performance assessments hurt the bottom line of businesses that use them.)

If consumers believe that producers will raise prices or not procude more, they will buy that product quickly, even go into debt to do so. If producers believe that consumers will pay more for something later, they will try to wait before bringing it to market. (That's why pastel M&Ms aren't in stores in the fall--people will pay more in the spring for them.)

The answers post by the user, for information only, FunQA.com does not guarantee the right.



More Questions and Answers:
  • Is there a big problem in the US, about people marking US dollars?
  • Which mexican city is the best about economy,security, human develop.,?
  • For which market model are there a very large number of firms.?
  • Should government more aggressively or less aggressively regulate business? Why?
  • Names of the developed countries?
  • What is the role of "LIC" in the devolepment of indian economy?
  • 11. Refer to the above diagram for a monopolistically competitive firm. If more firms would enter the industry
  • She works in Sweden and sends money to her parents in Thailand. Would they get more $ if she worked in usa?
  • What was the consumer price index for the last 5 years?