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Reference no: EM1311356

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: EM1311356

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