In 2007, a sharp downturn in the U.S. housing market reduced the income of many who worked
Question:
In 2007, a sharp downturn in the U.S. housing market reduced the income of many who worked in the American home construction industry. In October of that year, a Conference Board of Canada report stated falling house prices in parts of the United States, combined with low savings and rising energy costs, would result in weak U.S. consumer spending. Furthermore, U.S. imports of wood and autos would decline because of the slower U.S. economic growth. With this information, use one of the principles of economy-wide interaction to trace a chain of links that explains how reduced spending for U.S. home purchases is likely to affect the performance of the Canadian economy.
Step by Step Answer:
Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson