“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.
You might also like to view...
When can backward induction be used to arrive at the equilibrium for a game?
What will be an ideal response?
Refer to Figure 14.1. Other things equal, an increase in the Fed's concern about deviations of inflation from the target inflation rate is best represented as a movement from
A) point X to point Z. B) point Z to point X. C) point Z to point Y. D) point Y to point X.
New Keynesian theory says that
a. changes in the money supply can have long run and short run effects on real variables. b. changes in the money supply can have short run effects on real variables, but not long run effects. c. changes in the money supply can have long run effects on real variables, but not short run effects. d. changes in the money supply have no effect on real variables in the short run or the long run.
Name the two international institutions that have been formed to attain higher rates of global economic growth and briefly discuss what each of the agencies does
What will be an ideal response?