1.Shifting the Demand and Supply Curves, Economic Statements, the Circular Flow

Model, and the Five Fundamental Questions (18 points)

Read the article on the next page, "Surprise Uptick in Spending by Americans as

Delta Spread" and answer the following questions (parts a, b, c, and d) related to the

article.

a.The article discusses how certain sectors experienced increases in sales in August,

while others did not fare as well.If we look at online sales and those at

department stores for August will show the demand curve shifting in one

direction.What direction did the demand curve shift for these sectors in August?

At the same time, the article talks about what has been occurring to jobless claims

and the level of savings for those who are working.If you are a business owner

reading this information, you will have certain expectations for your business

going forward, causing your supply curve to shift.What direction will the supply

curve shift based upon this information?

Based upon the simultaneous shifts to the supply and demand curves, what impact

will they have on the equilibrium price (increase, decrease, or indeterminate) and

on the equilibrium quantity (increase, decrease, or indeterminate)? Stating that

either one stays the same will be marked incorrect. (10 points)

b.Would stating that "retail sales rose a seasonally adjusted 0.7% in August from the month before," be an example of a positive economic statement or a normative economic statement? (2 points)

c.According to the circular flow model, which one of the two markets would retail

sales be a part of? (2 points)

d.Explain how this article addresses one of the five fundamental questions, covered

in chapter 2 and the Week 5 Notes.State the question and explain how the article

discusses and answers the question. (4 points)

Surprise uptick in spending by Americans as delta spread

By JOSEPH PISANI The Associated Press September 16, 2021

NEW YORK (AP) Americans continued to spend at a brisk pace last month in the face of rising COVID-19 infections, though much of it was done online and not at restaurants or other sectors in the U.S. economy beleaguered by the arrival of the delta variant.

Retail sales rose a seasonally adjusted 0.7% in August from the month before, the U.S. Commerce Department said Thursday. That uptick caught most economists by surprise. Consensus estimates were for a decrease of 0.85%, according to a survey of economists by FactSet.

Online sales soared 5.3% last month, while sales at restaurants and bars, many of which believed they were through the worst of the pandemic until the arrival of delta, were flat from the month before.

Earlier this year as millions were vaccinated, restaurants, bars and other venues that rely on crowds began to bustle for the first time since early 2020. Then, in July, U.S. health officials recommended that even vaccinated people should wear masks when indoor in public due to the unchecked spread of delta, particularly in regions of the country with lower vaccinations rates.

Vaccine hesitancy in the U.S. is being cited by economists after the Labor Department reported this month that employers added just235,000 jobsin August, far short of the million or so jobs added in each of the previous two months.

Back-to-school shopping may have given retail sales a boost. Sales at department stores rose 2.4% last month, according to the Commerce Department, as children headed back to the classroom and perhaps for the first time in more than a year, bought new clothing and other supplies.

The retail report released Thursday covers only about a third of overall consumer spending and doesn't include services such as haircuts, hotel stays and plane tickets. There is clear evidence that spending has waned in some of those industries. Airlines, for example, recentlyreporteda drop-off in ticket sales and they blame the spread of the delta variant.

Auto sales continued to fall last month, likely because fewer cars were made due to a pandemic-related shortage of chips, which are needed to power screens and other tech features in cars. Sales at auto dealerships sunk 3.9% last month, the Commerce Department said.

Some economists still hope for a larger bump in consumer activity this year. The four-week average of jobless claims, which smooths out fluctuations in the weekly data, dropped for the fifth straight week, the Labor Department said Thursday. That's the lowest since the pandemic began.

More people are finding jobs and many of those who have remained in their jobs have saved cash during the pandemic and will have more to spend, said Sal Guatieri, a senior economist at BMO Capital Markets.

"The surprising upturn in August retail sales supports this positive message," Guatieri wrote.

However, much depends on whether the U.S. can contain the spread of the virus.

The Labor Department also reported Thursday that the number of Americans seeking unemployment benefits ticked higher from a pandemic low last week, a sign that the spread of the delta variant may have slightly increased layoffs.