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Impact of change in investment on gdp

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Reference no: EM1311118

Commentators on the US economy feel the US economy fell into a recession in 2001 and then proceeded into a slow=growth recovery due to a decline in investment.

A. Explain how a change in investment can have a big impact on GDp causing a nationwide slump.Recall that investment is "small' relative to the whole economy.

B. Illustrate your reasoning using our AD/AS model.

C. How did low interest rates combined with increased government spending on defense and homeland security alter the US economic outlook?Explain using our AD/AS model.

Reference no: EM1311118

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