“The increasing importance of durable goods has made our economy more vulnerable to cyclical fluctuations.” Explain and evaluate.

What will be an ideal response?


There is evidence that durable goods purchases are much more volatile than non durable purchases. Therefore, to the extent that durable goods production becomes more important relative to endurable, this statement would be true. However, the service sector of our economy has grown even more rapidly than either of the manufacturing sectors. Therefore, one might argue that this offsets to some degree the growth in importance of durable.
Another factor which would tend to offset the volatility may be the rapidly changing technology in durable goods such as appliances, entertainment products, electronic goods, and so on. This tends to make products obsolete at a more rapid pace than ever before and may offset the tendency of people to postpone purchases of durable goods.

Economics

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