Question

•Chapter 10 – Economic Fluctuations; LEI, time horizon, AD, AS, what shifts AD & AS

1.What is the LEI? What’s in the LEI?

2.What are the time horizons we talk about in macro and what is the main difference in those time horizons?

3.What causes shifts in AD?

4.What causes shifts in AS?

Answer 1

Answer 1;

Leading Economic Indicators is a composite index of 10 underlying economic indicators used individually or together tp predict changes in the business cycles. Some of the important indicators are- hours worked by the manufacturing workers, applications for unemployment insurance, speed of delivery of goods, stock index etc.

2. Time horizons are large when we talk about macro and generally more than one year.

3. AD shifts with change in consumption or investment or government spending or net exports of the country.

3. AS shifts with increase in population, investment in capital, research and development etc.