Two major shocks that led to the Great Recession were a) decline in household wealth, negative credit shock b) negative credit shock, monetary policy shock c) housing price decline, government spending increase d) negative credit shock, trade war
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Two major shocks that led to the Great Recession were
a) decline in household wealth, negative credit shock
b) negative credit shock,
c) housing price decline, government spending increase
d) negative credit shock, trade war
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- A severe negative supply shock occurs when there is a significant reduction in the supply of key inputs, such as labor, raw materials, or energy. This can lead to a reduction in output, higher prices, and potentially stagflation (i.e., high inflation and low economic growth). To tackle the effects of a severe negative supply shock, governments and central banks may use various macroeconomic policies. Supply-side policies: Supply-side policies refer to measures aimed at increasing the productive capacity of the economy. In the case of a severe negative supply shock, the government may implement supply-side policies such as tax incentives or subsidies to encourage firms to invest in new technology or production methods. However, these policies may take time to have an impact and may not be sufficient to offset the immediate effects of the supply shock. explain this graphically please.Classify each of the following as a supply shock or a demand shock. Use a graph to show the effects on inflation and output in the short run and in the long run. Financial frictions increase. Steel workers go on strike for four weeks. Households and firms become more optimistic about the economy. Favorable weather produces a record crop of soybeans and cotton in the Midwest.Explain in details how high inflation can lead to a recession in several ways.
- Which of the following events would not involve a supply shock that would shift the aggregate supply curve? (i) The Cosatu union disintegrates and the minimum wage is abolished. (ii) African bank plc’s bad debt creates a financial crisis and that leads to reduction in money supply. (iii) 2016 drought destroys half of the crops farmed. (iv) A tax on sugar is levied on companies that produce sugary beverages. Group of answer choices Only ii and iv are correct. Only ii is correct. Only iii and iv are correct. Only i and ii are correct.Both the Great Recession and the Great Depression a. had unemployment peaking at 10% b. were caused by short-run aggregate supply shocks c. were associated with falling prices d. were associated with a financial crisisWhich of the following would properly be classified as an unfavorable supply shock? a)The interest rate decreases, spurring investment spending. b) There is an increase in government spending. c)A hurricane hits a major city, destroying factories, roads, airports, and homes. Because the city was a major port and transportation hub, goods and services need to be rerouted, increasing transportation costs for firms nationwide. d)The government introduces a set of market reforms that strengthens property rights and makes it easier and safer for buyers and sellers to write contracts. e)There is a technological improvement that allows firms to reduce their costs of production permanently.
- Determine which statements about the Great Recession, in comparison to average post‑World War II (post‑WWII) recessions, are true and which statements are false. The unemployment rate was higher during the Great Recession.The rise in real GDP was greater during the Great Recession.The recovery in output and unemployment took longer after the Great Recession.42. Stagflation is an example of Group of answer choices Negative Demand Shock Positive Demand Shock Positive Supply Shock Negative Supply ShockSort the following shocks into aggregate supply or aggregate demand shocks. Remember that "shocks” include both good and bad events. No need to motivate your answer. Fall in the price of oil A rise in consumer optimism A hurricane that destroys factories Good weather that creates a bumper crop A rise in sales taxes Foreigners buy fewer goods Fear New inventions occur at a faster pace A faster money growth rate
- Which of the following is not one of the possible general sources of shocks that can cause business cycles? Select one: a. Open market operations to of businesses to increase their global competition. b. Unexpected political events, such as peace treaties, new wars, or terrorist attacks, can create economic opportunities or strains. c. When productivity unexpectedly increases, the economy booms; when productivity unexpectedly decreases, the economy recedes. d. Irregular innovations may contribute to the variability of economic activity.Which of the below did NOT happen during the Great Recession of Dec. 2007 - June 2009? Group of answer choices Christina Romer, the then chair of President Obama's Council of Economic Advisers estimated that household wealth increased by 5% between December 2007 and December 2008. Banks had made subprime mortgage loans to overly leaveraged American families who could not make their mortgage payments. The American Recovery and Reinvestment Act (ARRA), or President Obama's Stimulus Bill was enacted in 2009. The investment bank, Lehman Brothers, declared bankruptcy leaving all of its creditors high and dry.Opponents of using policy to stabilize the economy generally believe that a. neither fiscal nor monetary policy have much impact on aggregate demand. b. attempts to stabilize the economy can increase the magnitude of economic fluctuations. c. unemployment and inflation are not cause for much concern. d. All of the above are correct.
