Unit 8 Project
MT445 Managerial Economics
Chapter 19, Question 5
(Economic Fluctuations) Why doesn’t the National Bureau of Economic Research identify the turning points in economic activity until months after they occur?
There are often fluctuations within the different phases of the economy which are caused the seasons and other chance occurrences. Oftentimes, these small disturbances are not enough to show economists that there is necessarily a problem because a drop in production might only be temporary. Recessions and economic depressions have to be measured over a long period of time to get an accurate idea of the economic stability of a region or country, and often you have to look back a long period in order to understand the problem.
(Aggregate demand and supply) Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. Which curve shifts, and in which direction? What happens to aggregate output and the price level in each case?
a. The price level changes
b. Consumer confidence declines
c. The supply of resources increases
d. The wage rate increases
a. Price level changes affect both aggregated demand and aggregated supply curves. When price drops, it raises the amount of goods that are in demand. The short-run supply curve curves to the right. When price increases, there is a drop in the quantity of goods and services supplied and the short-run aggregate supply curve curves toward the left.
b. When consumer confidence declines, there is a decrease in the demand curve. This causes the curve to shift to the left.
c. When the supply of resources increases, more products are being produced which supersedes demand for the item. This will cause the curve to shift to the left.
d. When wage rate increases, the supply curve shifts upward.
Chapter 20, Question 12
(Convergence) Explain the...