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The begining of Creat Recession 2007-2009? Could you discuss the following: Declining real GDP, Rising Unemployment,...

The begining of Creat Recession 2007-2009? Could you discuss the following: Declining real GDP, Rising Unemployment, Falling inflation rates, and declining wealth?

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Answer #1
  • Great recession of 2007 -2009 was characterized by fall in real GDP and employment opportunities. Sub-prime crisis led to the fall in aggregate demand which caused undesirable outcomes in forms of unemployment and fall in output.
  • Growth of GDP slipped from peak of 4.1 %. Investment activities were negatively affected, Hence there were scant profit expectations thereby business houses postponed decision of investment. Downgrading investment reduced output and employments.
  • Unemployment which was around 4.5 in 2007 rose to 9.5 % in 2009. Fall in aggregate demand decreased inflation rates. It is estimated that over 30 % value of houses were lost during the recession.
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