Supply and Demand Topic Index

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Data Connections and Additional Resources
Average Weekly Hours, Manufacturing

The quantity of hours worked at a particular business is a reflection of supply and demand in the labor market. For example, hours worked at a business will rise if the firm's demand for labor increases (which can occur because of improved labor productivity of increased demand for the firm's product), or if the supply of labor increases. By the same token, hours worked in the overall economy will increase if, for example, labor productivity rises or the demand for final goods and services rises.

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10 Year Treasury Bond Yield

The forces of supply and demand operate in the (resale) bond market to efficiently adjust bond prices so that bond yield equals the prevailing interest rate. For example, if a Treasury bond pays 5 percent interest, but prevailing interest rates rise to 10 percent, then the demand for the Treasury bond will decline, since it generates a substandard return on investment, causing the price of the bond to fall. The equilibrium price for the bond occurs when the bond yield equals the prevailing interest rate.

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Money Supply (M2)

While we are accustomed to thinking about supply and demand for consumer goods and services, there is also a supply and demand for money. The supply of money in the economy is controlled by the Federal Reserve Open Market Committee. The demand for money comes from consumers and businesses needing money to make routine purchases, to pay for unanticipated expenses, and to invest if opportunities arise. The equilibrium interest rate is found at the point where the supply and the demand for money intersect.

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Real Per-Capita Disposable Income

When real per-capita income rises, perhaps due to an increase in productivity, then consumption spending will usually increase as well. The implication is that for normal and luxury goods, such as vacation travel and restaurant meals, a rise in real per-capita income will cause demand to increase.

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