1.How does consumer confidence interact with public policies when in a recession? How about in a boom? Does it make policies more effective or less effective in achieving economic stability? Why?
Public policies usually predicts consumer confidence to be high, but during a recession, consumer confidence is just the opposite. when the economy is in a boom, consumer confidence is high. This can negatively effect public policies and make them less effective in achieving economic stability because when consumer confidence is higher, consumer spending goes up which expands the aggregate demand.
Burton's Macroeconomics blog 