Question.3770 - PART A: The Great Recession and the AD/AS ModelThe AD/AS Model explains business cycles. A decline in Aggregate Demand (AD) and/or a decline in Aggregate Supply (AS) will result in a recession (a recession is a decline in real GDP for at least two consecutive quarters). An increase in AD and/or a decrease in AS will cause inflation (inflation is an increase in the general price level).Using the AD/AS model, explain the reasons for the Great Recession. What factors (the AD or the AS factors) triggered the recession in 2008? How did the collapse of the real estate market affect these components? You can use your findings from the bea table 1.1.1 for 2008-09.Please first read the articles before you post your answers.What Would Have Keynes Done?Links to an external site. Links to an external site.Direct Link: https://scholar.harvard.edu/files/mankiw/files/what_would_keynes_have_done.pdfLinks to an external site. Also published in NYTimes https://www.nytimes.com/2008/11/30/business/economy/30view.htmlLinks to an external site.It's the Aggregate Demand Stupid!Links to an external site. You can view full article by David Wessel here (if you have access to NYTimes) https://economix.blogs.nytimes.com/2011/08/16/its-the-aggregate-demand-stupid/?_r=0Links to an external site.PART B: The Covid-19 Recession and the AD/AS ModelThe US economy (as well as other countries around the world) entered another recession almost 12 years after the Great Recession due to Covid-19. Please first read the following articles about the Covid-19 economy. Using the AD/AS Model, explain the shifts in AD and AS. What are the causes of the Covid-19 recession?In each part, please use just the AD/AS Model and their components in your answers (Remember that the AD components are such as the changes in consumption expenditure, investment expenditures, and government expenditures; the AS components are mainly resources-inputs in production, productivity, and technology). We will cover the real estate market crash and the financial sector later in the semester.
Answer Below:
Part xx recession xxxxxx when xxx equilibrium xxxxx is xxxxx the xxxxxxxxx GDP xxxxx are xxxxxxx factors xxxx triggered xxx Great xxxxxxxxx The xxxxxxx trigger xxx the xxxxx Recession xxx the xxxxxxxx of xxx housing xxxxxx which xxxxxx a xxxxx reduction xx investment xxxxxxxx especially xx residential xxxxxxxxxxxx This xxxxxxx in xxxxxxxxxx I x major xxxxxxxxx of xx reduced xxxxxxx demand xxx goods xxx services xxxxxxx et xx With xxxxxxx housing xxxxxx and xxxxxx unemployment xxxxxxxxx reduced xxxxxxxx significantly xxxxx led xx a xxxx in xxxxxxxxxxx C xxxxxxx key xx component xxxx faced xxxxxx losses xxx both xxxxxxxxx and xxxxxxxxxx had xxxxxxx access xx credit xxxxxxx to xxxxx consumption x and xxxxxxxxxx I xxxx further xxxxxxx AD xxxxxxxx the xxxxxxxx in xx was xxx primary xxxxxx the xxxxxxxxx crisis xxxx affected xxx supply xxxx The xxxxxxxx of xxxxxx markets xxxxxxx business xxxxxxxxxx in xxxxxxx goods xxx technological xxxxxxxxxxxx which xxxxxxxxxx affected xxxxxxxxxxxx and xxxxxxxxx economic xxxxxx However xxx immediate xxxxxx of xx during xxx Great xxxxxxxxx was xxxx severe xxxxxxxx to xxx demand xxxx When xxx real xxxxxx market xxxxxxxxx homeowners xxx a xxxxxxxxxxx drop xx their xxxxxxxxx wealth xxxxxxx them xx spend xxxx money xx other xxxxx and xxxxxxxx due xx decreased xxxxxxxxxx in xxxxx financial xxxxxxxxx Weinberg xxxx fewer xxxx sales xxxxxxxxxxxx companies xxxxxx back xxxxxxxx leading xx job xxxxxx in xxx construction xxxxxx and xxxxxxx impacting xxxxxxxx activity xxxx BThe xxxxxx pandemic xxxxxx a xxxxx economic xxxxxxxx in xxxx lockdowns xxx social xxxxxxxxxx were xxx in xxxxx industries xxxx travel xxxxxxxxxxx and xxxxxx took x big xxx because xxxxxx stopped xxxxxxxx money xxxxxxx With xx much xxxxxxxxxxx many xxxxxxxxxx also xxxxxxx new xxxxxxxx and xxxxxxx buying xxxxxxxxx or xxxxxx big xxxxxxxxxxx On xxx of xxxx global xxxxx was xxxxxxxxxxx as xxxxxxxxx shut xxxx leading xx a xxxx in xxxxxxx and xxxxxxx Supply xxxxxx were xxxxx disrupted xxxxxxx shortages xx important xxxxx Factories xxxxxx t xxxxxxx fully xxxxxxx workers xxxxxx t xx in xxx strict xxxxxx rules xxxx it xxxx to xxxx products xxxx one xxxxx to xxxxxxx This xxxx it xxxxxx for xxxxxxxxxx to xxxx up xxxx demand xxxxxxxxx the xxxxxx of xxxxx and xxxxxxxx Albanesi xxx As x result xxx overall xxxxxx in xxx economy xxxxxxxxx making xxxxxx more xxxxxxxxx and xxxxxxx further xxxxxxxx for xxxxxxxxxx and xxxxxxxxx The xx curve xxxxxxx left xxx to xxxxxxxxx consumption xxxxxxxxxx and xxxxx The xx curve xxxx shifted xxxx due xx supply xxxxx disruptions xxxxx shortages xxx reduced xxxxxxxxxxxx ReferencesAlbanesi x Kim x Effects xx the xxxxxx Recession xx the xx Labor xxxxxx Occupation xxxxxx and xxxxxx Journal xx Economic xxxxxxxxxxxx https xxx org xxx Weinberg x November xxx Great xxxxxxxxx and xxx aftermath xxxxxxx Reserve xxxxxxx https xxx federalreservehistory xxx essays xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx E xxxxxxxxx L xxxxxxx S xxxxxxxxx What xxxxxx Caused xxx Great xxxxxxxxx Institute xxx Research xx Labor xxx Employment xxxxx irle xxxxxxxx edu xxxxxxxxxxxx irle-policy-brief xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Braniff x September xxx Precarious xxxxx of xxxxx Understanding xxx Impact xx COVID- xxx Opportunities xx Support xxxxx Recovery x Center xxx Financial xxxxxxxxx Center xxx Financial xxxxxxxxx https xxx centerforfinancialinclusion xxx the-precarious-state-of-msmes-understanding-the-impact-of-covid- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx gad xxxxxx gclid xxxxxxxxxx BhB xxxx ZOx x Nf x we xxxxx uckM xxxxxxxxx YYb xxxxxxx lekVibohoC xxxxxx BwEMore Articles From Economics
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