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Jumpstarting the Economy

Rank which of the following five changes are preventing the aggregate demand curve from shifting outward and jump-starting the economy (list 1 as the most important and 5 as the least). Please explain why you ordered the ranking as you did.
1. Changes in income
2. Changes in expectations (consumer confidence)
3. Changes in wealth
4. Changes in credit conditions
5. Changes in tax policies

Solution Preview

The first one should be "Changes in expectations (Consumer Confidence). Here you have to look at articles that explain consumer confidence, or consumer expectation and preferably that have somehow quantified it (use an index) and explain that as long as consumer confidence about future income prospects remains low, manufacturers, retailers, developers are not investing in providing a supply because consumers aren't going to purchase it. This lack of incentive to produce translates into low employment (companies aren't interested in hiring because there is no demand). ...

Solution Summary

The expert ranks five changes preventing the aggregate demand curve from shifting outward And jump-starting the economy.