Question

2. (5 points) Here are few industries and four forecasts for the macro economy. Choose the industry that that you would expect to perform best in each scenario. Industry: Grocery stores, Airlines, Housing construction, utilities, steel, grocery stores, automobiles, gold, food products Economic Forecasts: Deep recession: Falling inflation, falling interest rates, falling GDP Superheated economy: rapidly rising GDP, increasing inflation and interest rates Healthy expansion: rising GDP, mild inflation, low unemployment. Stagflation: falling GDP, high inflation

Answer 1

Economic forecast / Industries	Grocery stores	Airlines	Housing construction	Utilities	Steel	Automobiles	Gold	Food products
Deep recession	Grocery stores			Utilities			Gold		Utilities, Grocery stores will perform consistently because these industries fulfills the basic needs of human so these industries will perform consistently with the state of the economy. People prefer to investment in gold as investment because rate of industrlization is low in Deep recession
Super heated economy	Grocery stores	Airlines	Housing construction	Utilities	Steel	Automobiles		Food products	This is the state in which economy grow in many folds and income of people increases so people invest in housing, automobile and due to which demand for steel, food products and grocery stores increased due to high demand from public
Healthy expansion	Grocery stores	Airlines	Housing construction	Utilities	Steel	Automobiles		Food products	In this stage of economic cycle healthy expansion of business takes place, income and employment opportunities are available for all and investment opportunities are available due to which scope for expansion of housing utilities, steel and automobile, food and grocery stores increases
Stagflation	Grocery stores			Utilities				Food products	this is the economic state with steady economic development and limited investment and employment opportunities due to which scope for further development stops and demand for basic necessities are maintained