Question by Deborah S: In which of the following industries or sectors of the economy is output likely to be most strongly affected?
by the business cycle”
a) military goods
b) capital goods
c) textile products
d) agricultural commodities
Best answer:
Answer by Coda2
You don’t have manufacturing listed but I have to believe that this one is the one that is hurting now the most.
Look at the auto industry (only one of many manufacturing goods) and the trickle-downs of unemployment to Tier 1 and Tier 2 suppliers. Many auto workers have taken buy-outs or face losing their jobs. Also many suppliers are facing bankruptcy because they cannot absorb the increase in materials that the auto makers won’t reimburse for because of long term contracts.
Look at the economy in Michigan. It stinks. Detroit has more than 300 homes on the auction block due to foreclosure. Foreclosure rates are unbelieveable in Michigan. Drive around the suburbs and see many homes for sale or with foreclosure signs. It is really sad.
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1 Response
If you recall GDP = Consumer + Investment + Government spending + (Exports – Imports)
Military, textiles and agricultural goods are pretty steady and not that disturbed by the business cycle. The investment category (capital goods) though is the most volatile and can swing wildly during the business cycle.
Posted on May 6th, 2011 at 11:22 pm
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