Causes and dynamics of a recession homework help
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 selfadjust, 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?