Question

Assume we are studying the circular flow of the economy as it applies to Ford Motors. Further assume that there has been a serious decline in car sales and economic forecasts predict a deepening recession. In response to these circumstances Ford cuts back 25% on vehicle production and eliminates all overtime for workers at at its factories. Describe how this will effect the following: ( Increase or decrease and why.) 1. Orders for material resources such as steel, glass, tires: 2. Laborer’s earnings: 3. Sales at neighborhood stores: 4. New orders from car dealerships: 5. The housing market: House sales will_____________ Prices will ____________. Apartment rents will ___________ Vacancies will_____________ and Repairs to apartments will be _______________. Why?

Answer 1