If the u. s. economy went into a recession next year (where incomes and wealth falls), there would be a(n) in the a) increase; quantity of cars demanded. b) decrease; demand for cars. c) no change; demand for cars. d) rightward shift; demand curve for cars. e) right shift; quantity of cars demanded.

Option B

Explanation: Correct answer is decrease in demand for cars. As the wealth and income of consumer falls their sources of expenditure decreases leading to a decrease in demand in general, this effect is called INCOME EFFECT. The decrease in wealth and income may not severely affect demand of necessary products like daily household consumption products but cars is not a necessity and is considered a luxury item thus its demand will decrease.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answercountries with higher real income per capita tend to have higher levels of this index.