Question

The above infographic highlights the five determinants of demand:

The price of the good or service.

Income of buyers.

Prices of related goods or services. These are either complementary, those purchased along with a particular good or service, or substitutes, those purchased instead of a certain good or service.

Tastes or preferences of consumers.

Expectations. These are usually about whether the price will go up.

In terms of aggregate demand, we need to think about all consumers in the U.S. economy and whether or not we are "demanding" more goods and services relative to other years.

In a few months, the current U.S. economic expansion will be the longest on record. It's already three times longer than the average expansion since 1854, and twice the average since 1945, according to numbers compiled by the National Bureau of Economic Research. The economy is certainly growing with unemployment at a record low and consumer sentiment at very high levels.

Please describe any consumer behaviors that you believe have contributed to the current economic expansion. You will want to tie these behaviors to the five determinants above.

Answer 1