What are demand shocks? Give an example of a positive and a negative demand shock
What will be an ideal response?
Demand shocks are unexpected changes in the demand for goods and services. A sudden decline in average incomes will generate an overall decline in the consumption of goods and services in an economy. An unexpected depreciation of the dollar will increase the amount of exports and reduce the amount of imports in the United States, creating an overall unexpected positive effect in the demand of the goods and services produced in the United States. Finally, a sudden decline in the liquidity of banks will increase interest rates and reduce economic investment.
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The African agrarian system is characterized by
(a) absentee landlords. (b) a dual agrarian system known as latifundio-minifundio. (c) land fragmentation. (d) shifting cultivation.
All of the following are problems associated with maintaining a cartel except that:
a. cartels are illegal. b. a large amount of information is needed to coordinate a cartel. c. profits are not maximized by a cartel so it will evolve into a monopoly. d. each member of the cartel has an incentive to "chisel" by expanding output.
Which statement is true?
A. Open market operations are seldom conducted any more. B. The basic way the Fed controls the money supply is by manipulating the discount rate. C. During periods of severe recession, the Fed tries to push up interest rates. D. During periods of severe inflation, the Fed tries to push up interest rates.
If GNI adjusted for cost of living in China is about $13,000 while GNI adjusted for cost of living is about $56,000 in the United States, then
A. China enjoys a higher purchasing power parity. B. Americans enjoy a higher standard of living C. The U.S. economy is growing more steadily than China's economy. D. China's economy is growing faster than the U.S. economy E. China's standard of living should catch up to that of the United States in about four years.