Question

Besides relevant theories and keen logic, a scientist who does research in economic psychology and who wants to predict the way in which consumers will spend their money must study consumer behavior.  It’s vital for his credit as a qualified economist.   He must obtain numbers and material both on the resources of consumers and on the efforts that tend to encourage or discourage money spending.

If an economist were asked which of the three groups borrow most——people with rising incomes, stable incomes or declining incomes——he would probably answer: those with declining incomes.  Actually, in the past 5 years, the answer was: people with rising incomes.  This shows us that traditional assumptions about earning and spending are not always reliable.  Another traditional assumption is that if people who have money expect prices to go up, they will hurry to buy.  If they expect prices to go down, they will postpone buying.  But research surveys have shown that this is also not always the case.  Their expectations of price increases may not stimulate buying.  One typical attitude was expressed by the wife of a mechanic in an interview at a time of rising prices.  “In a few months,” she said, “we’ll have to pay more for meat and milk.  We’ll have less to spend on other things.”  Her family had been planning to buy a new car but they postponed this purchase.  Furthermore, the rise in prices that has already taken place may be hated and buyer’s resistance may be caused.  This is shown by the following typical comment of the wife: “I just don’t pay these prices: they are too high.”

Traditional assumptions should be investigated carefully, and factors of time and place should be considered.  The investigations mentioned above were carried out in America.  Research conducted at the same time in Great Britain, however, produced results that were more in agreement with traditional assumptions about saving and spending patterns.  The condition most beneficial to spending appears to be price stability.  If prices have been stable and people have become accustomed to considering the current prices “right”, they are likely to buy.  Thus, in a society of good economy which maintains consumer confidence, it appears that the common business policy of maintaining stable prices with occasional sales or discounts is based on a correct understanding of consumer psychology.

72. According to the passage, it is essential for a successful economist to ______.

       A. know about economic theories 

       B. be capable of logical thinking

       C. predict the latest national economy

       D. to understand consumers’ spending habits

73. The example of the mechanic’s wife is intended to show that ______.

people tend to buy more when prices are expected to fall

people tend to buy less when prices are expected to fall

people tend to buy more when prices are expected to rise

people tend to buy less when prices are expected to rise

74. Findings in investigations in Britain show _____.

consumer behaviour may vary in different places

Britain and America share similar saving and spending patterns

Britain is important in economic research

occasional discounts and sales are important

75. According to the passage, what is most helpful in promoting spending?

       A. Big discount.     .      B. Good consumer confidence.

       C. Steady price.            D. Positive consumer psychology.

Answer 1

72-75 D D A C