On And The Collapse Of The Housing Bubble Consider The Following Dialogue About The Crash Of The Housing Market And The 1 (30.64 KiB) Viewed 62 times
On And The Collapse Of The Housing Bubble Consider The Following Dialogue About The Crash Of The Housing Market And The 2 (26.94 KiB) Viewed 62 times
On And The Collapse Of The Housing Bubble Consider The Following Dialogue About The Crash Of The Housing Market And The 3 (18.29 KiB) Viewed 62 times
On and the collapse of the housing bubble Consider the following dialogue about the crash of the housing market and the Great Recession of 2007-2009 between two students in a economics class. TIM: H, Alyssa. I'm intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there's one thing I don't understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well? ALYSSA: Hi, Tim. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the system deteriorated as well, an event that deepened the economic downturn even further. TIM: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand and aggregate supply model to explain the effect of the bursting of the housing bubble on GDP? in spending on construction of ALYSSA: The professor used the aggregate demand and aggregate supply model to show that new houses causes an shift of the aggregate curve. TIM: I see it now. And as a result, GDP as well. I would like to use a graph to illustrate what you've just said.
On the following graph showing the aggregate demand (AD) and aggregate supply (AS) curves, shift the relevant curve to illustrate Alyssa's explanation of the effect of the collapse of the housing bubble on domestic product. ? AS AD₁ AD₂ Price Level Domestic Product AD 1 AS
Determine whether each topic in the following table would more likely be studied in microeconomics or macroeconomics. Topic Microeconomics Macroeconomics A consumer's optimal choice when buying a flat-screen TV The effect of government regulation on a monopolist's production decisions The effect of a large government's budget deficit on the economy's price level
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