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Unformatted text preview: s declining, month over month Recession began December 2007 Why the ambivalence about recovery? Recovery When total output is rising, month over month Recovery began June 2009 Administrative Matters Overview of Course Today’s Economy
Today’s Economy What Caused the Recession? Shortest answer: Drop in spending Administrative Matters Overview of Course Today’s Economy
Today’s Economy Consumption Spending Consumption rose from 62 to 70% of total Longer answer involves mortgages & financial markets Businesses produce what will be sold Splurge financed by credit
• Home Equity Lines of Credit (big story) So “aggregate demand” matters
demand” Aggregate demand (total spending) is by Households: Consumption spending (C)
Businesses: Investment in equipment & structures (I)
Government: Gov’t purchases of goods & services (G)
Rest of the world: Net exports (NX) =
Exports from U.S. – Impor...
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- Spring '08