Economics
The word demand has a special meaning in economics. Most American teenagers own a pair of sneakers. Because of high demand and high price, however, not everyone who wants a pair of Nike Air Force 1 sneakers is able to acquire this particular brand. As you read this section, you’ll learn that the idea of demand centers on people being both willing and able to pay for a product or service.
After years of more or less continuous growth and relatively low macroeconomic volatility during the years named “The Great Moderation”1, the US economy entered in December 20072 what seems to have been the deepest recession since The Great Depression3 The recession has been of relatively long duration and contained both a credit-crunch and a significant downturn in the housing market.
The probability for corporate success varies together with the business cycle, and there is no doubt that the state of the macro economy influences the rate of investor and corporate success. This means that the potential risks of changes in business cycle growth rate is a potential threat to all market participants, which needs to be handled through risk management.
Even though the different business cycles can be described through relatively simple models such as the one explained in section ( U.S. business cycles ), the underlying reasons for the developments and the amplitude of the business cycles seems to be changing with each cycle. Wesley Clair Mitchell who was one of the early researchers of business cycles and leaders of NBER stated that; “since each business cycle in a sense is unique, a thoroughly adequate theory of business cycles, applicable to all cycles is unattainable” (Dua 2004, Page 1).
Planning a budget is essential to ensuring your income is used efficiently. It helps cut down on nnecessary spending and enables you to use your money to purchase the things you need—or want—most.