The recession of 2007-2009 was the worst economic downturn suffered by The United States since the Great Depression of 1929.

(a) What economic shock was principally responsible for the recession?

(b) Illustrate, and explain graphically- using business cycle and aggregate demand, and aggregate supply graphs- how the recession impacted real GDP and employment.

(c) illustrate graphically and explain how Keynesian economic theory and not classical economic theory regarding macroeconomic fluctuations was used to cure the recession.