MACROECONOMICS (LOOSELEAF)-PACKAGE
13th Edition
ISBN: 9781337492317
Author: Baumol
Publisher: CENGAGE L
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Chapter 14, Problem 4DQ
To determine
To explain: The effect of a collapse in house price resulting in recession.
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In a situation of recession, what are the types of goods that will see their demand increase? Give examples
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Why may these issues lead to a reduction in consumer spending? Consider how consumers change the timing of their purchases to reflect the market.
What caused the Great Recession of 2008 in the United States?
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MACROECONOMICS (LOOSELEAF)-PACKAGE
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- What factors influence the demand for non-durable goods during an economic recession?arrow_forwardIf mortgage rates fell to 0 percent ("free money"), why might consumers still hesitate to borrow money to buy a home?arrow_forwardIf a bank expects inflation to increase in the near future, how will it respond? It will start paying less interest on deposits. It will seek to reduce the amount of cash held in its vaults. It will temporarily scale back its efforts to gain new customers. It will start charging more interest on loans. It will temporarily suspend withdrawals.arrow_forward
- What is worst recession in France in terms of magnitude?arrow_forwardSally, a resident of Scandia, goes to a salon for a haircut. The haircut, which usually costs $50, now costs $40. Sally is confused and curious to understand why she could get the haircut at a lower price despite the salon not offering any discounts. She also notices that the prices of all goods and services in Scandia have decreased. Which situation is occurring in the economy?Inflation Disinflation Deflation Stagflationarrow_forwardWhat were the causes and consequences of the Great Recession?arrow_forward
- What happens when firms and workers underestimate future prices in the economy? Explain the answer while focusing on what would happen to actual output as opposed to the expected potential output.arrow_forwardThe percentage change in the overall level of prices in an economy is called a. contraction.arrow_forwardYou are the chair of the president’s Council of Economic Advisers. There has been an extremely hot and dry summer due to climate change. As a result, crop production has fallen drastically. The president calls you to the White House to discuss the impact on the economy. Would you explain to the president that a sharp drop in U.S. crop production would cause inflation, unemployment, or both?arrow_forward
- reading Wheelan's Chapter 9, 'Keeping Score'. Wheelan wrote this chapter pre-pandemic 1. What topic within this chapter piqued your interest? Be specific and try to connect it to the current recession and economic reckoning we currently face.arrow_forwardSuppose most business executives expect a slowdown in the economy. How might this situation affect the economy? Give at least 2 suggestions.arrow_forwardWhat happens when firms and workers underestimate future prices in the economy. On what would happen to actual output as opposed to the expected potential output.arrow_forward
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