In finance and economics the dow theory is a theory that


In finance and economics, the "Dow Theory" is a theory that states the demand for goods should be reflected in the amount of cargo carried by transportation companies and delivered to consumers and businesses. The Dow Jones Transportation Average (DJTA) is an average of the share prices of 20 transportation companies, such as FedEx, Delta Air Lines, Con-Way Trucking, and CSX Rail. All of these transportation companies—airlines, railroads, trucking, delivery—move the nation's goods. Their share prices are an indication of how well their businesses are performing. The Dow Theory implies that a higher DJTA correlates to a greater need for cargo transportation, while a lower DJTA correlates to a lesser need for cargo transportation. In the second week of February 2014, the DJTA decreased 5.9 percent, which was the biggest weekly decline since November 2011. The DJTA is down 1.2 percent year to date, primarily because of lower amounts of goods carried by transportation companies. Suppose that the U.S. economy is at Situation 1. According to the Dow Theory, the recent changes in the DJTA most likely imply that _____. A. U.S. aggregate supply increases the economy from Situation 1 to Situation 2 B. U.S. aggregate supply decreases the economy from Situation 1 to Situation 3 C. U.S. aggregate demand increases the economy from Situation 1 to Situation 2 D. U.S. aggregate demand decreases the economy from Situation 1 to Situation 3

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Business Economics: In finance and economics the dow theory is a theory that
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