Prices change. Sometimes the price change is caused by a shift in supply, sometimes it is caused by a shift in demand, and sometimes both supply and demand change, leading to uncertain ambiguous results.
We try to drill these basics of supply and demand over and over in our introductory economics classes. But these lessons seem to escape many students once the exams are over. And the lessons seem to escape too many economists who too often reason from a price change rather than looking for what underlying factor(s) may have caused the price change.
Scott Sumner at EconLog has an excellent brief post about this issue.
The questions . . .
Would it be a good thing if interest rates rose?
Would it be a good thing if copper prices rose?
Would it be a good thing if the dollar appreciated?
. . . are all basically meaningless. In all three cases, the prices never change for no reason at all. In each case the real question is whether the thing that causes the price to change makes us better off or worse off.
In all three cases, the price/interest rate/exchange rate might rise due to strong economic growth in America. That would probably be a good thing. The exchange rate and the interest rate might rise due to tight money. That would be a bad thing if tight money were not appropriate at that time. Copper prices might rise because of civil wars in copper producing nations. That would be a bad thing.
This isn't just a minor problem; the economics profession is waste deep in reasoning from a price change...
Sumner adds some examples about interest rates.
But the problem is a serious one: when a price changes, don't ask if it is good or bad because the correct economics answer is, "It all depends". Ask why the price changed. And once that answer is clear(er), you'll have a better idea of whether it is good or bad ... and for whom.