Numerous causes contributed to the great recession in the US economy from 2007 to 2009, which impacted the global economy directly or indirectly. The United States of America faced a subprime mortgage crisis at the time for a variety of reasons, including the Federal Reserve lowering the federal funds rate and flooding the economy with liquidity, resulting in international trade imbalances and lax lending standards. These events contributed to high levels of developed country household debt and real estate problems that have since burst, as well as the US government's housing policies. Explanation in detail Aggregate demand is the entire quantity of products and services demanded by consumers, private investors, the government, and foreigners at various price levels, all other variables remaining constant. The aggregate supply of goods and services is the total production of goods and services enterprises wish to produce at any given price level. The steep reduction in aggregate demand resulted in a severe depression and a decline in investment demand, which resulted from the capital's marginal efficiency collapsing (expected rate of return). (refer to the graph attached)

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