ECON 224 Lecture 8: Module 8
20 Oct 2016
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*economic growth = long run increase in real gdp. Political events (election, president assassination, terrorist events) Our economy enters a recession: demand will decrease so prices will fall, quantity will decrease. Prices are sticky (many companies prices are fixed, they don"t want to re print all their menus so not all markets will change their prices) Leads to surpluses goods sitting in inventory that aren"t getting produced. Decrease employment because they don"t change their prices so that means more workers laid off. Durable goods are most affected (things we have for long periods houses, plants, other new items that we either already have a version of or we don"t need) Food and clothing (necessities may purchase less brand clothing but still keep similar consumption because it"s a need) In december 2007, the u. s. economy entered into the great recession . It took 4 years to get back to prerecession levels. Unemployment rate stayed above 8% for nearly 5 years.
