Between 2007 and 2009, the United States experienced a severe financial crisis and economic downturn commonly known as the Great Recession. Starting in 2006, housing values fell 30%, causing losses in mortgage-backed securities for families and financial institutions. The recession was marked by a drop in aggregate demand that caused a decline in GDP and an increase in unemployment.

In your initial post, draw or find an example of an aggregate demand and aggregate supply (AD/AS) model that illustrates the general trends of the U.S. economy during the Great Recession. (The example may be from your own research or from the textbook.) In addition to your image, provide a response to the following:

• How did the AD/AS equilibrium change over time? Support your claims by referring to your AD/AS model.
• Select an economic factor (GDP, unemployment, price level) and explain what impact any shifts in AD or AS (or both) had on your chosen factor.

Real GDP per working-age individual (aged 15-64) in the U.S. In 2009 dollars The U.S. economy did not return to 80,000 the 2007 level of output per capita 75,000 until a little over five years later, in 70,000 first quarter 2013.2 The productivity 65,000 60.000 trend lines for the previous four 55,000 recessions show that the economy 50,000 Great Recession usually snaps back more quickly. 45,000 Even now, the U.S. economy is still 40,000 1977 1982 1987 1992 1997 2002 2007 2014 about 10 percent below normal (that is, trend growth in 2007).3 Shaded areas denote recessions. Source: Federal Reserve Bank of St. Louis FRED DatabaseFigure 1 - Real GDP Growth and Inflation Shocks. The sample is quarterly 1968Q4- 2019Q2. Shading corresponds to NBER Recessions. Real GDP growth shock 2 -4 -6 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Inflation shock 2 -2 -4 -6 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015