Assume a trend in employment and output witnessed nationally will affect activity in the local economy. Consider initial and secondary effects of a fall in Consumption and Investment Spending on a local firm and its employed individuals. These individuals must analyze the shift in the aggregate demand (AD) function to predict equilibrium GDP and price levels in the short and long term.

• Given the circumstances outlined here, do you expect spending on homes and other high-value goods (such as vehicles, home appliances, vacations) in local communities to rise or fall, and for what reasons?
• In the longer term, when all prices may vary, given the circumstances outlined here, do you expect spending on homes and other high-value goods (such as vehicles, home appliances, vacations) in local communities to rise or fall, and for what reasons?