Economy Market
Not what you're looking for?
Given an economy that is operating at less than the full employment level, analyze the effects of an increase in consumer confidence on the following markets. Start with an initial equilibrium in each market.
1. The market for goods and services and the relevant variables in the market.
2. The money market and the relevant variables in the market.
3. The foreign exchange market and the relevant variables in the market.
4. The market for single family homes and the relevant variables in the market.
5. The market for household furniture and the relevant variables in the market.
If completed early, you can submit to me. Thanks.
Purchase this Solution
Solution Summary
Economy markets goods and services for relevant variables are provided.
Solution Preview
First, let us try to understand what happens when there is an increase in consumer confidence. Clearly, the immediate effect is that consumers believe that the economy is growing strong, and believe that they are not going to lose their jobs (or they will quickly find a job in the case of unemployed consumers). Thus consumers purchase more goods when their confidence is high.
i) When consumers buy more goods (or services), the aggregate demand for goods increases. Firms will soon realize that inventory level has dropped, and need to increase production in order to meet this increase in demand. Since the labour market isn't at full ...
Purchase this Solution
Free BrainMass Quizzes
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.