Consider the following forecast: Next month, we predict that the demand for oranges will continue to increase,

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Consider the following forecast: “Next month, we predict that the demand for oranges will continue to increase, which will tend to raise the price of oranges. However, the higher price will increase supply, and a greater supply tends to lower prices. Accordingly, even though we predict that demand will increase next month, we cannot predict whether the price of oranges will rise or fall.” There is a serious mistake of logic in this forecast. Can you find it? Explain.

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Macroeconomics Principles and Applications

ISBN: 978-1133265238

5th edition

Authors: Robert e. hall, marc Lieberman

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