NOTE: write an essay based entirely material from Schiller textbook, Chapters 5, 6, 7, 9 and 10 without reliance upon or reference to any outside sources. These essays should be based completely on material from our textbook.
To help get started, we have learned that recessions demonstrate expenditures and incomes depend on each other. Imagine the implications of spending gaps in terms of the models we have studied. Further, if markets do not self-adjust, consider how a decline in spending can lead to a negative intensifying process that ruins an economy.
Hints — Within your answers, consider the following:
–Identify and summarize the market effects of changing leakages and injections, and the debates over self-adjustment.
–How do measures of GDP, employment and price levels play out in the different scenarios based on the models?
–How do propensities and multipliers, and even expectations affect the outcomes in an economic downturn?