Question

Assume the following economic indicators: interest rates on loans are historically low, gasoline prices are low, unemployment rates are falling, and automakers are increasing their sales forecasts. For Kaitlyn, a human resource executive at a financial company that makes auto loans, which statement best states how these leading indicators should shape a forecast of her company’s demand for labor?

Answer 1

Answer:

Te answer is: The demand for new cars will rise, so the demand for auto loans will also rise, increasing the labor demand in companies that offer auto loans.

Explanation:

When the price of a good or service decreases, the quantity demanded for that good or service will increase.

Interest rates can be considered as the price of a loan, so when interest rates fall, the quantity demanded for loans will increase. This factor plus an increase in car sales, low gasoline prices and low unemployment are the perfect conditions for the auto loan industry to flourish.

When any industry is expected to do so well, their demand for labor is also expected to increase.