Describe the macroeconomic equilibrium after an increase in spending by Gen Z:

a. If the economy had been operating below full employment equilibrium.

b. If the economy had been operating at a full employment equilibrium.

c. Explain and draw a graph to illustrate how the economy adjusts in the two situations described in parts a and b.

A 2018 study estimated Gen Z’s spending power to be significant. Is this still the case? The pandemic destroyed many of the jobs that Gen Z seek, so like other predictions coming out of the pandemic, we’re waiting to see how the new reality affects Gen Z financially in the long term.