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The Federal Reserve System was created on December 23, 1913, coming from the enactment of the Federal Reserve Act. The Federal Reserve was formed largely in response to several financial panics that had grappled the United States of America. The Federal Reserve can be described as the central banking system that exists in the United States of America (Wicker, 2005). The Federal Reserve mission is to ensure that there are stable prices in the United States, the interest rates are moderate and there is maximum employment in the economy. This mission has however, over the years expanded and currently the Federal Reserve explores the nation’s monetary policy.
The Structure of the Federal Reserve can be described as being complex. This is because it is firstly composed of a Board of Governors that is presidentially appointed, the Federal Open Market Committee (FOMC), Regional Federal reserve banks that are normally located in the major cities in the United States and several privately owned United States member banks. It is of the essence to understand that the Federal Reserve has both the public as well as private stakeholders and consequently, it is able to serve fairly the interests of private bankers and the General Public (Wells, 2004).
The Federal Reserve is considered one of the most powerful institutions in all of America given that it conducts independent monetary decisions, which does not have to be approved by anyone else including the President or anybody else in the government. It is for this reason that the span of the terms of the members of the Board of Governors often spans several presidential as well as congressional terms (Michael, 1968).
The monetary policy generally influences the availability as well as the cost of money in a bid to promote national economic goals. There are three main tools that the Federal Reserve installs in order to influence the amounts of reserves that exist in the different private banks; the first is the open market operations. It involves the purchase as well as the sales of the U.S Treasury as well as Federal securities. This can be described as the main principal toll used in the implementation of the monetary policy. The second monetary policy tool that is used by the Federal Reserve is the discount rate.
This interest rate is often charged to commercial banks as well as other institutions that accept deposits on the different loans that they receive from the Federal Reserve Bank. The last tool is the Reserve requirements and it is the amount of funds that the Federal Reserve Bank often wants in their holdings from the different banks, and depository institutions. These three tools of monetary policy have been in use for the longest time in the United States (Marrs, 2000).
However, it is of the essence to note that there is indeed several times that the bank goes out of its way in order to control inflation and it might use several different factors as compared to the three listed above. For example, there is the existence of a term auction facility, which is a tool that offers term funding to depository institutions in bi-weekly auctions for fixed amounts of credit (Wilson, 2011).
In conclusion, the Federal Reserve System is the central banking in the United States. It structure incorporates both the private as well as public sector and ensures a balance between them. It uses three main monetary policy tools. Firstly, there are the open market operations, discount rate and the Federal Reserve requirements for funds.
Wells, R., (2004) The Federal Reserve System: A History. Sage: New York.
Wicker, E., (2005) The Great Debate on Banking Reform: Nelson Aldrich and the Origins of the Fed . Ohio State University Press.
Marrs, Jim (2000). "Secrets of Money and the Federal Reserve System". Rule by Secrecy (HarperCollins): 64–78.
Wilson, Linus; Wu, Yan (August 22, 2011). "Does Receiving TARP Funds Make it Easier to Roll Your Commercial Paper Onto the Fed?". Social Science Electronic Publishing.
Michael D. (1968), "The Political Structure of the Federal Reserve System," American Political Science Review, Vol. 55.
Background of Cincinnati
Cincinnati is a city that has diversified economic base that is made up of manufacturing, wholesale and retailing trade, insurance, government, education, health, and transportation. The city is known all over the world for the production of Procter & gamble soaps. It is also one of the major producers of the United States playing cards. The city has a high ranking as far as value of the shipment is concerned. Ten companies ranked in the fortune 500 list have established some headquarters in the city. Over 360 companies in the fortune 500 list also maintain operations in the city. The income generated from the retail sales in the city amount to an average of 2.8 billion dollar per year (Bumgardner, Graham, Goebel & Romig, 2011). Over one thousand local firms have been instrumental in the placement of the city of Cincinnati in the international market (Yu, Beck & all, 2009).
The firms have been capable of generating sales worth over six billion to markets located outside the United States annually. The city also enjoys significant flow of foreign investment with over 300 firms in the area being owned by foreigners. Toyota is one of the major employers in the area. The company selected the city as the location of its North American operation over any other city due to the excellent transport network and an excellent quality of life (Horner, 2013).
However, the city has been experiencing slumps in the economic growth with the majority of the operations going under. The patter in the economic performance depicted by the city is the same one with the patter that is displayed by the rest of the state. The same problems that affect the state are amplified in the city leading to the replication of the very gloomy picture witnessed in the other parts of the state. This paper will look at the economic performance of Ohio with Cincinnati being the focal point of discussion.
The projections of the economic outlook in Ohio are a simulation of how the economy of the entire nation will be in that time. The obvious element is that the future of the economic performance of the region and the nation as a whole is uncertain (Yu, Beck & all, 2009). However, despite the fact that the future is an uncertain, the past indicators may act as cues on the potential and limits of the future prospects for the larger Ohio and Cincinnati as a city (Horner, 2013). The past of the state has indicated that the unemployment rate for the state has been considerably higher than the one that is depicted by the entire nation. Since 2003, the rate of unemployment in Ohio has been higher than the rates that are posted by the nation. Prior to 2003, the rates of unemployment have been lower than the rates that the states posts.
The projections for the employment figures in the state indicate a gloomy picture since the majority of the forecasts place the population and income growth rate of the industry to be at a lower level compared to the national levels. This has a trickle-down effect since the lower the rate of income growth the lower the prospects of employment according to the economic forecasts made for 2008-2018. The job creation in Ohio is not as appealing as the other parts of the nation since the new job creation in the state is placed at 250000 jobs per year. The new jobs are primarily created in the service industries as opposed to the national trend whereby the jobs are created in the manufacturing and processing sectors of the economy (Bumgardner, Graham, Goebel & Romig, 2011).
The recession that officially started in 2007 and ended in 2009 had a particularly hard impact on the labor market in Ohio. The average rate of unemployment in the state was lower than it had ever been since 1995. From 2003, the rate of unemployment evident in Ohio has been higher than the national level of unemployment. The situation is deteriorating since the gap between the unemployment rates in Ohio has been widening.
The need for employment comes from the demand for the goods and services produced by the workers. The value of the output of any area is expressed in terms of the gross domestic product for the entire nation and the gross state product for the state. The ranking of Ohio in terms of the gross state product is high with the state being ranked at the 8th positions of all the states in the United States. The state also accounts for over 3.3 percent of the national domestic product according to the rankings undertaken in 2008. In a span on one year ranging from 2007-2008 the gross state product of Ohio underwent a decline by 0.7 percent. However, the real GDP witnessed an increase of 0.7 percent. This led to the ranking of the state in position 46th in the gross domestic growth category.
The change in the demand for the goods and services affects the production levels for the specific goods and services. In the local level, the demand for the goods and services is mainly affected by the population level and the income earned by the members of the population. The trend in the economic growth of the population and income has been below the bar set by the national growth statistics. For the ten years since 2000-2009 the population growth in the nation was 9.1 per cent while that of Ohio was a meager 1.7 per cent. In the same duration, the personal income in the nation underwent a growth of 29.1 per cent. On the other hand, the growth of the state income for Ohio grew by 23.3 per cent only. This means that the demand for the goods and services that determines the growth of the national income is lower than the average levels indicated by the national demand. This means that the rate of unemployment in the region will always be lower than the anticipated level.
The other aspect that has affected the employment sector in the state has been the decline in the employment in the motor vehicle and motor vehicle parts manufacturing. According to the statistics of production and employment distribution per industry in the state of Ohio, the level of employment in the manufacturing was higher than the national average ranging at 36 per cent of the national average (Bumgardner, Graham, Goebel & Romig, 2011). The concentration of the employment in the motor vehicle manufacturing and the spare parts manufacturing was 274 and 338 per cent respectively above the national average. In the period ranging from 2001-2007, the state lost over 1800000 manufacturing related jobs.
The labor force in the United States of America is composed of the employable people that are above the age of 16 and are not in the institution of learning. There are various elements that affect the size and demographic elements of the labor force of any state or nation. The size of the civilian population of age 16 and above is a major element that determines the labor force of the state. The population of the employable people is dependent on a number of aspects such as the birth rate, migrations and the death rate witnessed in any state.
In any population group, the proportion of the individuals engaging in the gainful employment activities or looking for work form the main determinants of the final size of the labor force. The above proportion is known as the labor force participation rate. The rate indicates significant variations according to the age and sex of the members that make up the population. For instance the participation rate among the young and old is lower than the rate in the people that are in their middle years. The main reason behind this trend is the fact that the majority of the young people is mainly in school and the old people have retired from the employment (Bumgardner, Graham, Goebel & Romig, 2011).
The future supply of the labor in the economy is thought to grow by 93000 from the 2008-2018. This is a divergence from the anticipated growth rates that had been forecasted in the previous ten year economic projection which had placed the supply of the labor force at 5.3 per cent in the 1998-2008 projection. The picture for the Ohio labor market is increasingly turning out to be gloomy since the labor force participation rate is bound to decline from the projected 67.2-65.8. The decline can be best explained from the anticipated retirement of the baby boomers. The analysis of the rate of participation according to the gender also indicate a gloomy picture for Ohio whereby the participation rates for both the women and men are on the decline. The women proportion that made up the labor force was undergoing a rise in the forecast conducted for 1998-2008. However, in 2018, the forecasts of the women participation rate will be at the constant attained in 2009 at 48.2 per cent.
The other trend in the labor statistics is that the people that are at the lower age groups are avoiding working or are unable to secure the gainful and relatively permanent employment opportunities. This trend emanates from the inability of the majority of the young members of the labor force to secure employment. This aspect can be noticed from the low participation rate of the young members of the labor force aged 16-24 years. The participation rate for the older members of the labor force is also higher than the one for the younger members of the population. The number of the workers that are above the 55 years age threshold is larger with the forecasted growth being rated at 34 per cent. The decline in the youngest workers in Ohio is placed at 128000 which is a whopping -13.9 percent. The prime aged producer groups is also experiencing significant delays with the combined decline in the prime age groups accounting for -307 per cent.
The projection on the new jobs that will be created in Ohio ranger at the region of 250000 jobs. The primary area where the jobs will be created will be in the service providing industries. This means that the significance of the manufacturing industry as the major source of employment will be dwindled by the service industry in the upcoming forecast.
The second possibility in the jobs situation in Cincinnati is that of the majority of the people employed in the manufacturing area being laid off. As the focus of the manufacturing in the state waivers, the employment situation will be gloomy even after the nation has fully recovered from the effects of the economic down turn.
Focus on the major industries
By 2018, the number of the jobs that are anticipated for the people in Ohio will rise from the 5.726-5.975 million. As stated earlier, the service industries will be responsible for the creation of the majority of jobs (Yu, Beck & all, 2009). Construction industry is the only goods producing industry that is anticipated to add jobs to the market. The education and health sector will be responsible for the largest proportion of the job addition in the next ten years. Education and health services will be responsible for the creation of the more than 45 percent of all the new jobs. More than one job in four will be added in the professional and business related service sectors.
Significant number of jobs are also anticipated in the construction industry, leisure and hospitality sector and other service related industries. Transport services, utilities and financial services will be responsible for the addition of over 10000 jobs in 2018. The government and the retailing sector will be experiencing some growth and expansion. This phenomenon will be responsible for the addition of more jobs come 2018. The sectors that will have significant loses in employment include the manufacturing, natural resource exploration and information services.
According to the information available at the department for labor in Ohio, two thirds of the manufacturing jobs are found in the production of the durable goods, the concentration for manufacturing in Ohio is higher than in any other states (Horner, 2013). This is a risky element since it has the downside of being affecting in a more negative manner by the business cycles. The motor vehicle manufacturing industry which forms the bulk of the majority of the jobs in the production of the durable goods will be impacted by the economic performance in a more serious manner. The industry has already had to employ various measures meant to reduce the number of jobs. Some of the players in the industry have has to deal with downsizing, plant closures and restructuring. The above measures can be pointed out as the main cause of the poor performance of the industry. The employment situation in the industries is projected to be on a continued downward trend.
The performance of the economy is not all gloomy since there are some industries that are anticipated to be on a high growth path. Some of the specific industries that are anticipated to have a high rate of growth includes the industries that are involved in the provision of individual and family services. The industries that focus on the above factors are anticipated to attain a high industrial growth of over 50 per cent from 2008-2018. Next industries that will have a high rate of growth are related to the health care. The demand for the social care and provision of health services will be on a high increase due to the aging of the population. Contrary to the common opinion and the past projections, only one computer related industry will be experiencing high rates of growth. This industry is the computer system design which is ranked fifth among the fasted growing industries.
The industries that have rapid job growth present the population with better job prospects. For instance, nursing and employment services provide direct employment to over 100000 people and they have a growth projection of over 15 per cent. The larger and better established organizations may also end up offering many jobs opportunities despite having a moderate rate of growth. A good example of such an industry is the private hospitals that are credited for the employment of over 225000 people and have an anticipated growth rate of less than 8 per cent from 2008-2018. The hospitals are among the 150000 new jobs that are added in the private care facilities.
This projection also included 22900 jobs in the administrative roles for the physicians, 21900 jobs for the nursing profession in the specialty nursing facilities, 19600 for the individual and family services and 18700 jobs for the healthcare service providers that avail the services from home to home. The computer design sector will add the 20400 jobs while the general stores will account for 18800 jobs. The section for the building equipment contractors will be responsible for the addition of 14600 jobs. Private education sector will account for 12300 jobs. The ten industries mentioned above will be responsible for the creation of over half the total jobs that are anticipated in the coming decade from 2008 to 2018.
The closure of the plants and general change in the business practices such as the growth of the outsourcing practice and the relocation of production capacity will have a significant impact on the employment from the manufacturing sector. In as much as the employment in the manufacturing sector will still be facing structural losses, the sector will be able to provide many job opening owing to the need of the industry to replace the aging members in the workforce. The restructuring will tend to absorb the employees that have unique skill packages as well as the ones that are highly productive (Bumgardner, Graham, Goebel & Romig, 2011). As the workers that belong to the baby boomers generation keep retiring in large numbers, the major challenge that will face the officials at the manufacturing industry will be finding the large replacement for the manufacturing workers who are often skilled.
High employment prospects
Some of the industries will have a combination of high growth rate and large number of the annual job openings. The majority of the industries that will display this behavior will be the health related industries.
Occupational employment prospects
The above section displayed the outlook of the demand for labor in the specific industries. Since the mix of the occupation in the industries differ, the demand for the occupational needs found in each industry will be experiencing rises and falls according to the fortune or rather the performance of the industry (Yu, Beck & all, 2009). This means that the occupational structure of the economy and the industry are closely related. The staffing pattern affects the occupations that are found in virtually all the industries such as the secretaries that are found in all the industries.
In as much as the labor market in Cincinnati was experiencing the reeling effects of the 2001 recession when the 2007 recession set in, the employment will still grow in 2018 albeit in a slow manner. On average, the economy will be having 167000 annual openings which will be mainly created as a result of the workers leaving the employment due to various reasons. The majority of the job opening will be a result of the need to replace the outgoing personnel with more than 3 out of 4 jobs being created from the need to replace the employees.
The proper identification of the occupation that have most favorable prospects will be crucial in the decision making. The changes in the technology will affect the demand for the employees in order to attain the most favorable mix of the employees that will enable the individual companies in the industry to operate in the most productive manner. The technological advancements will make some of the jobs redundant. Therefore the ultimate jobs will be reserved for the people that have the highest level of training even though the jobs in the wider Ohio region will be available for all the people.
Occupations with the highest growth rates
Home health aides rank high among the jobs that are experiencing the highest rates of growth. This is the case due to the increasing health needs for the people as the old members of the society face age related health problems. The baby boomers are now at their retiring age and they need constant medical attention. The other job health related jobs that will have high rate of growth included the athletic trainers and physical therapists. Computer and mathematical occupations are expected to grow at the rate of 1705 per cent. The systems data analysts and data analysts will be among this class of employees. The community and social service occupations are among the fastest growing areas in the industry.
The growth of new jobs is one of the parameters used in the analysis of the occupational demand. However a large source of the job openings is the openings net of the replacement needs. This means that the jobs are unique. With the majority of the job opening being meant for the replacement of the employees that may have left the jobs out of aging or to look for new jobs, the opening are not sufficient indicators of the jobs that the people need.
This means that it is too early for one to state that there are new job openings since the majority of the jobs will not be new at all but will be more replacements. The industries that are on the declining slope will also end up employing more people. The occupations on the majority of the annual opening will be the high employment, high replacement needs and the tendency of being less skilled than the predecessors (Pianalto & ra, 2011). The jobs will be mainly offered at the entry level and the workers will expect to have occupational mobility as the y advance in the education and training. Experience is also another important parameter that will have a significant impact on occupational mobility.
In Cincinnati, the sales position are top among the occupations that have high rates of openings. This is statistical trend that is also reflected on the national statistics. The cashier and retail sales persons are at the top of the detailed occupations. The food preparation and serving workers are also highly ranked in the list of the jobs that have high job openings. The occupations that have a large number of annual opening have a close correlation with the high rates of employment.
The salespersons working in the retail sector are the most employed people. The people employed in the food preparation and serving are the second in that order. In 2008 each of the occupations mentioned above had employment of at least 100000 jobs. Health related jobs are also on high growth path. These jobs will also have a significantly large number of annual openings. Health related jobs will account for the majority of the job opportunities for the people in Cincinnati (Pianalto & ra, 2011). An increased life expectancy will be alone of the major drivers for the increase in the job openings.
Educational and training levels
Generally speaking, the Ohio economy will provide jobs to people in all the educational levels. From the previous analyses, one can see the direction of the job market whereby all the field seem to have some openings for all the people. The above jobs outlook means that the economy will be in need of the skilled and the semi-skilled people in the same proportions. The semiskilled workers will be needed in the freight movement and other field that call for menial work and less skills. However, this is not to say that education will have no role in the placement. On the contrary, the education level will play the bigger role in the jobs placement in Cincinnati. The people that have the at least post-secondary training will have better chances at advancement in the majority of the occupations whether manual or technical. The occupations that have post-secondary employment requirement will be projected to grow at a higher rate averaging at 908 per cent as opposed to the 2.1 percent for the occupations that do not require the post-secondary education. The occupations that required moderate and on job training were projected to grow at the lowest rate possible.
High prospect employment
This is the employment that has the highest median wage of $15.30 per hour. The high employment prospects had at least 500 annual openings. The declining occupations are still deemed to be high employment prospects with estimated annual replacement openings being larger that the annual decline in the employment prospects. An example of a high employment prospect job is the registered nurses who are largely seen to have the average hourly pay of $28.72 per hour. Truck drivers and teacher also belong to this category. An example of employment that is projected to be on the decline is the industrial production managers that will lose 1550 jobs for the period of upcoming 10 years. This translates to 155 jobs lost annually. This is unmatched by the 388 replacement needs for the industrial production managers.
The economical situation at Cincinnati is not gloomy. It is true that the rate of growth in the state is lower than that of the other states in the United States. However, the state has always had that kind of growth. For instance, the nation was always faced with a low population growth that always lagged after the national average. This means that the state is not behaving in any manner that is unexpected. The low population growth can be termed as the main reason behind the lagging demand. However, the city still has major linkage with other states that are performing well. If it is able to control the flow of the materials that are made to other parts of the nation that need them the low population growth and the subsequent lag in the demand will no longer be an issue.
The replacement needs of the baby boomers will be another aspect to consider. The baby boomers may be seen as the major drivers of performance in the economy. Their retirement calls for new people to fill the positions that the baby boomers will vacate. The fact that the baby boomers were the majority of the workers means that the state will have a large gap to fill in terms of the employment needs (Horner, 2013). The replacement needs will be sufficient for the creation of the right approach towards the unemployment, this is a similar trend that prevails in all parts of the nation since the baby boomer generation was not limited to the state of Ohio.
As the baby boomers age, there is a creation of new set of jobs that are needed to provide for their health. Registered nurses are the beneficiaries of the presence of the baby boomers. Majority of the registered nurses are slowly retiring from the hospital jobs to become home health aides. There are other people that benefit from the presence of the baby boomers such as the physical therapists.
Bumgardner, M., Graham, G., Goebel, P., & Romig, R. (2011). Perceptions of firms within a cluster regarding the cluster’s function and success: Amish furniture manufacturing in Ohio, 597--606.
Horner, L. (2013). Manufacturing in Ohio (1st ed.). [Columbus, OH]: Office of Workforce Development, Bureau of Labor Market Information.
Pianalto, S., & ra,. (2011). Perspectives on the economic outlook and monetary policy, a speech delivered at at Xavier University in Cincinnati, Ohio on May 11, 2011. Federal Reserve Bank Of Cleveland Speech, (May 11).
Yu, X., Beck, R., & all,. (2009). The Performance and Economic Benefits of Thick Granular Base for Flexible Pavement Design in Ohio.
It is consumers who normally make the ultimate decision on the products that they need to purchase. They are also the decision makers on the exact moment when the product should be purchased. If consumers believe that the prices for a given commodity will decrease in the future, then there is likely to be a go-slow in the purchase of that particular product. The demand will decrease as consumers wait for the expected decrease in prices to take place. Alternatively, if the same consumers are convinced that prices for a given commodity will increase, they will rush to acquire that particular product so as to avoid the expected price increases. However, it must be noted that consumer demand is not only affected by expected future prices. There are other factors that are equally critical such as expected income changes. When consumers expect higher future incomes, they will start consuming more than their income suggests. This is based on the belief that they can now afford to consume more. In the event of an economic slowdown, most incomes will naturally be lower, and this will imply that most individuals buy different commodities or postpone major purchases. However, it must be noted that the effect of an expected income change on a product’s demand will largely depend on whether the said commodity is an inferior or a normal good. When the economy is performing poorly, and incomes are falling, the choices of people are greatly limited and may, therefore, be forced to purchase inferior goods. This is regardless of whether their incomes have changed or not.
As far as economics is concerned, the most powerful tool is the demand and supply model. However, it is only in perfectly competitive markets that this model applies. There has to be many sellers and buyers, and all the products being traded have to be identical. Further, no barriers to new entrants will have to be witnessed. It is because of the substitution effect that the demand curve slopes downwards. This simply put, is the change of quantity demanded which results from a change in price that makes a commodity less or more expensive compared to another commodity. The income effect, on the other hand, represents a change in quantity demanded which is as a result of any changes in either consumers’ purchasing power or prices. Shifts in demand curve are, therefore, caused by factors like changes in expectations, incomes, demographics, prices of related goods, population, as well as tastes. For market equilibrium to be achieved there has to be the intersection of the supply and demand curves.
A market equilibrium that is competitive is, therefore, characterized by many sellers and buyers. It is only at this point where quantity supplied equals quantity demanded. Any price that exceeds the equilibrium will result in a surplus, and this will consequently imply that market prices have to fall. Prices that fall below the equilibrium, on the other hand, will result in shortages. This is where the quantity demanded exceeds the quantity supplied. When shortages occur, there will be a rise in market prices. In most markets, it is common practice for supply and demand curves to shift constantly. This will over time cause changes in equilibrium quantities and prices. If the demand continues to increase steadily compared to supply, there will be a rise in equilibrium price. If there is more increase in supply compared to demand, there will be fall in equilibrium price. Complements simply refer to goods that are used together.
The more one is demanded by consumers, the more the other one will also rise in demand. When the price of a complement decreases, the demand curve for that particular commodity will shift rightwards. When the price of a complement increases, the demand curve will shift leftwards. A good example is gym membership and energy drinks. When working out, most individuals prefer using energy drinks. The drop in gym membership fees will imply that individuals buy more energy drinks. Consumers can also be influenced greatly by advertisements. This will also see the demand curve shift rightwards, especially if the advertisements receive positive results. The role that demographics and population play in influencing demand can also not be underscored. In Canada, for instance, the ever increasing population has seen a similar increase in demand. A population’s demographics includes various factors like gender, race and age. For instance, Indo-Canadians, Canadians of Indian ancestry, have increased drastically in the past two decades. As this population increases, the demand for “Bollywood” films has also risen steadily.
Whenever there is only a shift in supply or a shift in demand, it becomes easy to predict any effect that this will have on the equilibrium quantity and the equilibrium price. However, when there is a shift in demand and supply at the same time, things become more complex. For example, in most markets, as the incomes increase and the populations grow, the demand curve will eventually shift rightwards. As the technology improves and new firms get into the market, the supply curve will normally shift rightwards too. The question of whether equilibrium prices will fall or rise over time will largely depend on the shift that is bigger. In the event that the demand curve shift is bigger compared to the supply curve shift, there will be an increase in price. It can, therefore, be established that when supply and demand interact, the quantity of goods produced is determined.
With regards to supply, there exist various factors that can shift supply. They include expected future prices, price of inputs, number of firms, technological change, as well as prices of substitutes. With regards to prices of inputs, anything that is utilized in making either a service or good will obviously causes a shift in supply curve. If an input’s price falls, the supply of the commodity that uses that input will automatically increase. The role that technological changes play in causing changes in supply can also not be underscored. Technology change, it must be noted, could either be negative or positive. It is also important that firms choose the goods carefully that they can be able to produce most effectively at low costs. This will give the firm the much-needed comparative advantage.
R. Glenn Hubbard, Anthony Patrick O'Brien. Macroeconomics, First Canadian Edition. Toronto: Pearson Education Canada, 2013. Print.
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