Blue Chip Financial Forecasts gives the latest prevailing opinion about the future direction of the economy. Survey participants include 50 business economists from Deutsche Banc Alex Brown, Banc of America Securities, Fannie Mae, and other prominent corporations. Each prediction is published along with the average, or consensus forecast. Also published are averages of the 10 highest and 10 lowest forecasts; a median forecast; the number of forecasts raised, lowered, or left unchanged from a month ago; and a diffusion index that indicates shifts in sentiment that sometimes occur prior to changes in the consensus forecast. Explain how this approach helps limit the steamroller or bandwagon problems of the panel consensus method.
Answer to relevant Questions"Interest rates were expected to increase by 85% of all consumers in the May 2004 survey, more than ever before," said Richard Curtin, the Director of the University of Michigan’s Surveys of Consumers.’ “More consumers ...Would a linear regression model of the advertising/sales relation be appropriate for forecasting the advertising levels at which threshold or saturation effects become prevalent? Explain.Dorothy Gale, a quality-control supervisor for Wizard Products, Inc., is concerned about unit labor cost increases for the assembly of electrical snap-action switches. Costs have increased from $80 to $100 per unit over the ...Is use of least-cost input combinations a necessary condition for profit maximization? Is it a sufficient condition? Explain.Commission-based and piece-rate-based compensation plans are commonly employed by businesses. Use the concepts developed in the chapter to explain these phenomena.
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