1. Explain why a household's consumption and labor supply decisions are interdependent. What impact does this interdependence have on the way in which consumption and income are related?
2. Why do expectations play such an important role in investment demand? How, if at all, does this explain why investment is so volatile?
3. How can a firm maintain a smooth production schedule even when sales are fluctuating? What are the benefits of a smooth production schedule? What are the costs?