As a manager, it is important to understand how the business cycle affects supply and demand, prices, and how economic shocks will impact your company’s markets, supply chain, and financing. The recent collapse of the housing market, the near failure of our financial system, the wild swings in commodity and stock prices, and the deep recession of 2007-2009 provide a virtual laboratory for the study of the economic shocks and stabilization measures taken to restore equilibrium.
Create a 1,400-word analysis based on the assigned market in which you include the following:
- Analyze the economic and sociological forces that drove the market equilibrium to unsustainable heights and the shocks that brought the markets back down. What might be done to moderate the effects of these economic swings?
- Discuss specific changes in supply and demand.
- Examine prior government policies and legislation that exacerbated the impact of the shocks.
- Evaluate the actions of the federal government and the Federal Reserve to restore equilibrium. How effective were these counter-cyclical policies?