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Situation C
Cousin Edgar is always thinking of the next business idea. This time, he
plans to invest in buying four gas stations. He reckons American
consumers have come to accept the high gasoline prices, and estimates
world prices for gasoline to increase even further with high demand
from India and China. Besides, Cousin Edgar thinks he will make a good
profit on the sale of convenience items at each station. But before buying
the gas stations, he decides to ask for your advice because you are taking
this course in business economics.
You happened to read the piece “Bank Lending Signal s a Strengthening
Economy” on page 856 of the textbook. Cousin Edgar needs financing
for his new business, but you realize there are more macroeconomic
factors he needs to consider in timing his decision. You decide to
research the economy in terms of GDP growth rate, interest rates, level
of unemployment, the business cycle, fiscal policy, monetary policy,
international trade, and demographics. You want to provide Cousin
Edgar with the most informed advice possible.
Situation D
After hearing of your taking this course in business economics, Uncle
Dan has e-mailed you asking for advice on his 100-acre corn farm. He
mentioned how, after 30 years of growing corn, he wishes to leave that
commodity’s market and enter a more profitable market instead. He is
thinking of subdividing his land and building homes and shops. He
reckons he could make a good profit by selling the homes and renting
the shops.
Before you can find time to answer Uncle Dan’s e-mail, you read the
piece “Will the Fed’s New Policies Revitalize the Housing Market?” on
page 896 of the textbook. Recognizing the costs and risks for Uncle Dan
in making the switch, you decide to research the economy in terms of