Question
From a spending model perspective, explain the causes and dynamics of a recession. However, to help get you started, consider that recessions seem to demonstrate
From a spending model perspective, explain the causes and dynamics of a recession.
However, to help get you started, consider that recessions seem to demonstrate that expenditures and incomes depend on each other. If markets do not self-adjust, consider how a decline in spending can lead to a negative process that ruins an economy? (Consider implications of gaps in the "Keynesian Cross" and/or the "Aggregate Demand/Aggregate Supply Diagram" to illustrate your points.)
Hints -- Within your answers, consider the following:
--Identify and summarize the market dynamics triggered by changes in leakages and injections.
--How measures like GDP, unemployment and inflation play out in the different scenarios?
--How do propensities and multipliers, and even expectations affect the outcomes in a downturn?
800 wrds please typed
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