Explanation : Both statements are correct. The economy may face shortages
because the demand for factors of production exceeds the supply.
Furthermore, companies might overinvest in production capacity which
can result in idling machines and workers if the economic growth slows
down.
Explanation : Durable goods have a long useful life in comparison to non-durables
and services. Therefore, consumers tend to delay purchase when
economic outlook is not favorable.
Explanation : Business cycle indicators need to represent the activities in the whole
economy and this should not be influenced by some particular sectors
that may have uncorrelated fluctuations.