To answer the following questions, students should use a sum of relevant economic theories

(if require) for the justification of their answers. Students can also use figures (i.e., supply

and demand curves) for presenting their answers.

Consider the financial crisis 2007-2009 in USA.

Now, assume that the crisis has been continuing for 10 years. We call this period as a long

run period.

1. Explain the effect of this crisis on the levels of Americans' consumption in long-run?

2. Explain the effect of this crisis on the levels of USA's investment in long-run?