Question

Describe what kind of relevant data can be obtained to help reduce uncertainties about supply and demand?

Answer 1

Two of the most important things that need to be obtained to have demand and supply stable are-

1. Keep a check on inflation and deflation:

Inflation influences people to buy less and deflation induces sellers to supply less. This is a basic economic phenomenon. To reduce demand and supply uncertainity, economic conditions are required to stay stable. This can only be done if the supply of money is stable. The FED has to maintain that.

  

2. Keep a stock of input:

Inventory of inputs has to be maintained to avoid the last minute unavailability of inputs. This creates loss for the suppliers as well as disappointment for the buyers. Keeping a stock of inputs as well as final goods sometimes helps a lot in solving this problem and maintaining the transactions as good as before.