The AD/AS Model explains business cycles. A decline in Aggregate Demand (AD) and/or a decline in Aggregate Supply (AS) will result in a recession (a recession is a decline in real GDP for at least two consecutive quarters). An increase in AD and/or a decrease in AS will cause inflation (inflation is an increase in the general price level).
Using the AD/AS model, explain the reasons for the Great Recession. What factors (the AD or the AS factors) triggered the recession in 2008? How did the collapse of the real estate market affect these components? You can use your findings from the bea table 1.1.1 for 2008-09.
Please first watch the following video and read the articles before you post your answers.
What Would Have Keynes Done?
Direct Link: https://www.nytimes.com/2008/11/30/business/economy/30view.html
It's the Aggregate Demand Stupid!
Direct Link: https://economix.blogs.nytimes.com/2011/08/16/its-the-aggregate-demand-stupid/?_r=0