Answer to Question #64051 in Macroeconomics for Emilie

Question

1)Thinking back to the discussion on the state of the macroeconomy, would you describe the economy as booming, recovering, or in recession during the last few years? Why? Use the AD/AS model to illustrate this graphically. Which curve do you think caused the change? Explain your reasoning.

Answer 1

The recession - a situation in which the plants produce fewer products than before. When realization stores reduced, and consumers make fewer purchases. This is a significant reduction in business activity, accompanied by a number of factors negative for the economy. During the last few years, we have been seen that all business in this case lacks working capital, it also have to cut production and lay off employees. The recession - a growing unemployment and reduce incomes. As a result of declining personal consumption, which again leads to the fact that business is selling less and reduce purchases from suppliers.