Consider the most recent recession which authorities say began in December 2007. Review the list of real shocks and spending shocks reviewed in class. In your opinion, what type of shock (or shocks) caused the downturn? Offer a couple sentences of explanation.
The real shocks of our economy affected in fall 2009 when president Barrack Obama escalated the War in Afghanistan the Solow Growth shifted to the left which was an negative effect and had a huge impact in our economy.However, in the aggregated demand which also had negative effect it was based on fear in the post 2008 when the recessions began in the United States.
ReplyDeleteWhen thinking about the recent recession in the United States, I think two major shocks led to our current situation. First, I think the shock of being in two wars really played a big role in making people feel anxious. Because of peoples’ uncertainty, I think the sudden overall decrease in spending was the second shock to hit the United States which help lead to our current recession.
ReplyDeleteWhen considering the current recession and what affected it I consider like my classmates have mentioned the war which like mentioned above it shifts to the left having negative effect. Also, an increase in taxes which give the aggregate demand curve a negative shock. Lastly, i believe a sense of fear for some also causing a negative effect causing a lower growth rate of spending.
ReplyDeleteI think many of the shocks have played a role in the financial status of the United States in the past few years. If I had to choose one to discuss though, I would choose the impact of fear. I think that several factors have caused a raise in fear. Like another student already said, the involvement in war could be a reason for fear. This involvement also leads to another shock, which is increased government spending. Also, seeing so many big firms struggle and take bailout money, like General Motors did, can also strike fear into people. When big firms and banks start to struggle, people tend to pay off their debt and freeze their spending.
ReplyDeleteAs the first comment said, the change in the presidency definitely caused fear amongst consumers. Not to be racists or sexist, but because potentially the first black president, Obama, or the first female president, clinton, was running for the presidency. The dramatic change in our society caused people to be more fearful. I haven't done the research on it but there could have also been a sudden increase in import growth which further drove the recession. We've discussed in class the X-M has been a negative number for some time now so if it became more negative could have caused a shock.
ReplyDeleteI have to say that I agree with the wonderful statements posted above by my classmates. Without a doubt, and I cant think of any other "MAJOR" reason, for the downturn of our economy, leading us into recession, other than the fact of the shock of the war that's been going on since December 2007. This also goes in tag with the shock of Fear. War simply causes fear in our society making people fearful of what outcome is going to be out of the War. There are plenty more other shocks that can be discussed about this, but above all I feel like war is the "MAJOR" shock.
ReplyDelete-Ulises Ramirez
Thinking about the current recession,there are two shocks that have impacted the united states. The first is our participation in the war. Because we are in the war, many U.S citizens have become very anxious. Second is the shock and fear citizens feel about the war. They spend less and try to conserve if and when there is an emergency.
ReplyDeleteWhen considering the recession I think mainly of war and fear as the two shocks that caused the downturn. People are fearful of losing their jobs, fearful of our new president and fearful of the war itself. Both of these shocks are significant but I believe the most important is the fear that is in everyone due to the recession and all of the events surrounding it.
ReplyDeleteSara Nydam
I agree with everyone else that war is a major shock that contributed to our recession. Not just was the war a shock itself but I feel it contributed by impacting other shocks. For example, because of the war, oil wasn't being imported at the same price. Meaning gas prices were going up and people started being more conservative about driving. This effected the recession as well, becuase the oil industry wasn't being stimulated like it was before the recession.
ReplyDeletei think as others have said the downturn started when the war started and when president obama was elected for president. the reason is because many people were fearful with the expense when bush declared war because people knew expenses were going to arise. and as for obama becoming president were also fearful because they didn't not want to lose more jobs and keep paying higher taxes because of the war.
ReplyDeleteFor the most part, everyone is talking about the war as being one of the main factors for the recession we're experiencing. While I do agree with the fact the war has caused fear amongst most Americans, I also believe the current recession is due to more than just the war. The stock market crash, banks closing, people losing their homes and jobs have all pretty much struck fear in most Americans. Even those who are fortunate enough to still have jobs and homes are scared to spend money for FEAR that they will end up losing everything as well. I think the media plays a big part in this. Sometimes I think the media has a tendency to blow things out of proportion. People watch the news and listen to reports about how bad our economy is today and they get scared. People need to remember that America has experienced recessions far worse than the current one in past history, but the news will lead you to believe that the "world may never be the same." If you look at America's history, the economy has had it's highs and lows. Right now we are obviously experiencing a low, but just as it's done in the past, the economy will adjust itself once again.
ReplyDeleteI think the recession started when the war was declared, a lot of money was put into this war. Another shock that caused the recession was the house value downfall. Apparently no one believed that the ridiculous home prices had an end and invested tons on money in somthing that collapse in a blink of an eye, bringing along with it many jobs and major companies.
ReplyDeleteI agree with most of the above that say fear was the biggest factor in the recession that started in December 2007. But fear itself doesn't appear spontaneously, it was the confidence that people had with buying homes and selling mortgages that caused this fear. People were so confident because everything was going so well they thought nothing could go wrong. When things did go wrong though thats people were hit with fear to do anything with their money but save it. The only way get out of the recession was to start spending but thats what got us into the recession in the first place, too much confidence in spending. So in the end I agree that fear was a major factor but that too much confidence can lead to fear.
ReplyDeletekenny tavoc
The U.S economy was in a recession from December 2007. I think there are many of the shocks have played a role in the financial status. First, I agree with the classmates’ thought, when the president Barrack Obama escalated the war that make a negative effect on the Solow Growth shifted, and the war make the business investment increased. War also caused the high tax and high unemployment rate. Second, I still believed that there are other factors caused the current recession, for example, housing bubble, stock market crash, bank bankrupt. In addition, the oil and food price also soared, and then consumption declined relatively rapidly, people speeding less and less.
ReplyDeleteThe recent recession that began in 2007 had a number of shocks that caused the downturn. First off, a real shock that affects the U.S. economy is war. The U.S. was still present in Iraq and fighting the Taliban in Afghanistan. Another real shock was the upturn in oil prices. Oil prices have been rising which cause a negative growth. And the spending shock was reduced wealth. The reduced wealth affected people after the housing market collapsed. Most American’s greatest asset is their home, and when the housing prices turned upside down, they lost the accumulated wealth they had, had in their homes. Those are some of the shocks I believe caused the downturn.
ReplyDeleteWhen considering the recession I think that besides the war being a major shock I also believe that it's also people that have increasing been spending more on nondiscretionary items such as medical needs or helping family members. And I also think that it can also be due to declines in household wealth, including investment losses and falling home values.
ReplyDeleteJosh Pond
In my opinion the two biggest shocks that caused the recession was the war which had a totally negative effect on the economy and people were afraid to buy out and spend money because it was uncertain if people would still have a job --Oakford Gross
ReplyDeleteWe have had real shocks that have definitely affected our economy. We had the aftermath of hurricane Katrina. The hurricane did enough damage to put a heavy bill on the rest of the country. We also had/have a war. In our case I don’t believe the war in Iraq is helping our Solow Growth Curve. If anything it is moving it to the left. After 2007 we have had some minor shocks like the earthquake in Haiti. We have had a positive shock like technology in the past several years. People are able to find jobs off the internet which at a slow rate is helping.
ReplyDelete-Alexandria Guerra
i think that the recent recession in u.s is related with spending shocks. in fall 2009 present Barrack obama escalated negative effect to war in Afganistan. it leads also negative effect to us economy. people feel fear about the war and they reduce their consumption. this fear decreases AD. it means that fear to war leads to lower growth rate of spending, negative AD shock.
ReplyDeleteI would have to agree that the wars caused fears in Americans and lead to a major part of our recession. The fear was a major factor along with other factors.
ReplyDeleteI think the most recent recession in the u.s has to be the houses plunging down. Many people lost there houses, went bankrupt, evicted. Also the banking in u.s. Many went bankrupt and the govt had to step in to help. Both effects put a shift to the left and became negative on the solow growth and ad shock.
ReplyDeleteI personally think that 'fear' caused the downturn of our economy the most. For instance, between year of 2009 and 2010, decreased consumption growth rate of money velocity resulted our aggregate demand curve shifted inward with decreasing money spending growth rate from 0.75% to -0.975% and decrease real GDP growth rate from 1.10% to -2.60% in one year.
ReplyDeleteWhen thinking about the recession that is said to have begun in December 2007, there are many shocks that may have caused the downturn. A lot of money went to the war, which lead to the next shock. I believe the shock from the decline in the labor force also had a huge impact. People were forced out of their jobs leading to a decrease in the amount of money being earned and spent.
ReplyDelete-Justin Balancio
I think the war and loans banks kept giving out were the shocks that caused our recession. A lot of money went to the war and the war caused gas prices to go up since we had to try buy off as much oil as possible like what we're kind of going through right now again with the revolution in Egypt except we're not involved with the war military-wise. Today, the revolution has had a major effect on us since our gas prices have shot up tremendously. Also, like we learned in "The Crisis of Credit", banks were giving out loans to people with bad credit which they were not able to pay back. This obviously was another downturn in the economy.
ReplyDelete- Ashley Ignacio
Reviewing the list of real shocks and spending shocks discussed in class it seems that all these had a factor in the recession. Reading chapter twelve also stated that small shocks over a period of time can also cause a recession. I think the war was definitely a big reason why we started to plunge downward because it started out small then ended up taken over two years and counting. I also think fear was another reason because people started to take money out of the stock market and lose money in the stock market.
ReplyDeleteFor me, when i thinking about what kind of real shocks are going to led to our situation is the war. Because I think the war is the most big role in making people feel anxious. So when people feel that they are anxious it is going to shifts to the left which having a negative effect.
ReplyDelete-Sanghun Lee
At the end of 2007 was when our country first started to feel the current recession that we are unfortunately still not completely over. I think that the number 1 shock and biggest shock of them all that affect the economy to have a down turn was the current war that we are still in. The reason why was because the country was spending too much money on the war and the country wasn’t prepared for it at the time. Many of the prices on different things increased and the people weren’t ready for all the increase in prices. Which also caused less demand for things.
ReplyDeleteI'm sure there would be an fantastic list of real shocks that we faced during the period of time 2007-2009, when the biggest crunch took place. We hopped into a second war engagement, and, if I remember correctly, there was an oil panic that drove gasoline prices over what they're currently at, so oil shock. Bank closures began to weaken the bonds between borrowers and lenders which led to the collapse of the lending market, sort of a monetary shock (little bit bigger than just decreased spending velocity though). To top it all off the jobs market tanked and hundreds of thousands of people lost their jobs, so there was a capital/human capital shock. That's about all I can think of for it though.
ReplyDeleteAs previously discussed above, the shocks of war, new presidency, and the failure of the financial market resulted in a negative economic growth.
ReplyDeleteWar costs money (over a third of govt spending), and that comes from taxpayers. The change in presidency, both political parties and the first African American president in US History, and the recession which started at the end of Bush's 2nd term caused people to be fearful for the uncertainty of where the country was headed. Also, the biggest financial failures in history, burst of housing bubble, the bank and auto bailouts, and the decline in job market resulted in the market uncertainty. This lead to the spending shock, in which people reduced their spending habits.
I believe the shocks that took place in this most recent recession was the war and a sense of fear. I think the war had the major role in this most recent recession and almost as a result caused a sense of fear in people and as a result people changed their spending habits. People started to save more then going out spending whatever they could which also caused people to not invest as much as they were before.
ReplyDelete-Bryce Kerns
I think that one of the reasons of downturn was the war that is the one of real shocks. People paid more taxes for the cost of the war. Also, failure of stock markets and increased oil prices gave people fear for their uncertain future. People tried to spend less money. It decreased consumption. Also, companies and people didn’t invest much. Therefore, I think that these situations affected to decrease AD and growth rate negatively.
ReplyDeleteMinju Kim
The first shock that I think caused the downturn in the current recession was the war. The war brought alot of expenses and in the end brought a downturn in the economy for the entire nation. Next, because of this downturn there was also a lack of confidence and increased the fear in alot of people. This fear and lack of confidence cause many people to make less expenses and hold on more to their money, therefore causing an even bigger downturn.
ReplyDeleteI think the shocks that lead to this recent recession is war and fear(memory).That makes Solow Growth shifted to the left which was an negative effect. US government spend too much money in war and they can't prepare and predict what will be going on. And war cause people's anxious too. Fear can be a memory. Also, by the memory people reduce thier spending habit.
ReplyDeleteFinally, it evokes failure of financial system.
I believe that there were many shocks in cause of the downturn in our economy. The main one I believe was that because we went to war causing an affect of uncertainty in people's spending. That also caused there to be less spending, affecting the economy even more. When people don't feel comfortable spending money, it causes the economy to take a downturn.
ReplyDeleteIn my opinion, there are many shocks that have caused the downturn but I think that being in war and people having fear inside them, are some of the main ones. I say being in war because everyone is thinking about how economy will be when things happen in war. I say fear because many people fear that they will lose everything they have in just a single minute of their lives. It will be hard for everyone to think that if they lose what they already have, it's going to be really hard to get it all back.
ReplyDeleteThe real shock factor that has the greatest effect on the downturn in our economy would have to be fear. Although many people above stated that it was fear of going to war, which I believe may have had some effect on the economy but not a large enough to cause the problems that we are dealing with. The fear was caused by lower consumer confidence in our banking and investment system. As the US banking system broke down (froze up) people were afraid to keep their money in banks because they were afraid the bank would fail and they would lose their money. Because banks did not have money from investors (savers) there was less money to lend, and business could not move forward.
ReplyDeleteI beleive that uncertainty was a major factor that led to the downturn in late 2007. 2008 being an election year it left alot of uncertainty which ultimatly lead to fear. People din't know who would be running the country or how they would handle the wars at hand. They also saw the gas prices rise around that same time which is never a way to ease over peoples fear or doubts in the economy.
ReplyDelete-amy harris
I think that the most recent recession which authorities say began in December 2007's cause is real shock. Especially, it was war. War is one of negative shock. Negative real shock can shifts the solow growth model curve to left. In other words, it is decreasing real growth and increasing inflation. At that time people feel fear about war, and they didn't spend their money, so it was negative effect on economy.
ReplyDeleteFirst , the real shocks we had is the war that made too many people in fear which caused people to less spending and less people investing their money. During the recession we had in 2008 the huge crisis that too many bank collapse and got bankruptcy like Lehman Brothers and other banks as well .These are the two shocks that made people cut down on their spending and made cautious about how their money is spent.
ReplyDeleteIn this country's most recent recession I believe there were two shocks that caused the downturn. Firstly, a real shock, the war had a huge negative effect on the economy. Because of the war, the second shock was a spending shock. Fear of lost jobs and lack of confidence in our banks caused the consumer to spend less.
ReplyDeleteStan Hunsucker
I believe that the most likely shock, that we discussed, would be fear. Fear would be the most viable shock, as well as the shock with the most contributing factors. I think that there are many factors raised in fear. Like many studens already said, the involvement in war could be a reason for fear. This involvement also leads to government spending, which is another shock. After that it is like a domino effect. One industry after another is hit with shocks, like ripple effects. Banking, Automotive, and the Housing industries are all major examples.
ReplyDeleteI think that some shocks that might have put us on a downward turn in the economy were two events. The first is the war that has been going on for ten years. This has been a drain on our money and resources. Also the banks collapsing had a big part in it. People werent trusting other people with their money so they saved it and people lost jobs.
ReplyDeleteSince December 2007, I believe that the shocks in this country came from a couple of events. The first event has been from a war that is still ongoing. The second event would be when people were losing jobs and banks were not trusting people to lend loans. This created the shock of fear.
ReplyDelete-Moises Lizama
Well I think that that when the war of of Iraq started, back in 2001-02 that would soon start the real shock in 2009. This was because there was fear within our country which lead to peoples spending habits to fall.
ReplyDeleteOne shock that influenced the recent recession was the shock to the components of Aggregate Demand. For example, during the recession people feared the economy and started to save money in case they ran the chance of losing their jobs. Thus consumption decreased and with it the spending rate did as well.
ReplyDeleteI believe that the war was a major real shock, a lot of people were afriad, and not spending as much. It along with few other shock sent this country into recession.
ReplyDeleteIsmael Bejerano
I believe the shocks that caused a downturn during this recession was the war, which also caused so many other shocks to occur such as fear and a decrease in the spending rate.
ReplyDeleteI think a big shock that affected us in December of 2007 into 2008 was the shock of the housing and credit markets. That and fear had a negative affect on the economy. The biggest shock was the increase in high oil prices which also made people hold on to their money - this makes spending go down - and this had a negative affect on the economy as well.
ReplyDeleteThe shock the of free money was one bank ware just giving it a way. Then have two war did not help.
ReplyDeleteThere were many factors that caused the economic downturn which began in December 2007. After our class discussions, I believe the recession started due to the risky lending practices and subprime mortgages which subsequently caused the burst of the housing bubble. When the prices of homes plummeted, along with the collapse of major firms and banks, people began to fear what was happening in the unpredictable economy. Unemployment also started to increase because the financial crisis flows in a cycle. When one institution collapses, others fall with it. Fear is a negative spending shock which caused people to hold on to their money rather than spend it on goods and services which in turn lowered the GDP. The last factor that I believe contributed to the recession was a real shock to the Solow growth curve. During the summer of 2007 gas prices reached a record high. This shock from the rise in gas prices helped to turn the recession into the crisis it became. Another interesting factor is that the United States imports more than it exports. I don’t think this really contributed significantly to the recession since the U.S. has imported more than it exported long before the 2007 recession, but this fact can lower the nation’s GDP and perhaps prolong the downturn.
ReplyDeleteMallery Wassink
In my opinion, major causes of the recession were having two wars happening at the same time, gas prices rising, and the housing and credit markets decline. Having all of these things going on at once really took a toll on the way people spent money, which in turn led to a downfall of the economy because necessities such as oil were just too expensive.
ReplyDeleteThe recession of 2007 was caused by several shocks one of the main real shocks being the war. I think that it was also brought on by several aggregate demand shocks over time, like fear, reduced wealth and higher taxes.
ReplyDeletewar bye far is one of the main causes of real shock.BUT I LOOK AT OTHER THINGS LIKE GAS AND ITS PRICING GOING UP AND DOWN THE HEALTH CARE SITUATION AND PEOPLE LOOSING THERE HOMES. THINGS ARE BECOME MORE EXPENSIVE BUT IS BEING SOLD AT LESS VALUE FOR NO REASON.
ReplyDeleteWhen looking at the current recession that hit the United States I think we were effected from the day we decided to go to war and also the way are government takes use of the money. All the money that was spend in the war was a waste due to this wa. From the moment we entered the war and spend all that money we had a negative real shock also we had negative aggregate demand because we lived in fear because money was slow and taxes were higher and exports were lower and wealth decrease inomrsouly. That is what I think of this recession alot had to do with war and how the government spend are money.
ReplyDeleteBy Priscilla Leon
The most recent recession that occurred in the united states which was in 2007,the recession was due because of the war that was happening with Iraq since 2000. in my opinion the war has caused a lot of government spending which has made our real shock negative. the reason I say this is because our aggregate demand is negative due to the fact that taxes are increasing, money is slowing down and people are living in fear due to money being low. the war has been causing more recession instead of helping our economy.
ReplyDeleteAdan Garibay
I believe the cause of the recession was mainly due to the involvement of the war. The terrorist attacks of 9/11 opted president bush to take troops and place them in afghanistan. Due to the war activities and cost for over ten years, America has found itself struggling.In my opinion, the Solow Growth has shifted to the left which has had an negative effect and impact in our economy.
ReplyDelete-Lauren Castro
War did play a major factor in the recession that occurred back in 2007. Wars are extremely costly which leads to higher taxes and government having to print more money if they can't afford it. That's where most of the costs have been going to since the war's started. It leads to fear with consumers not wanting to spend as much as they did before because they don't know what's going to happen. With fear of spending, consumers then fear to invest and banks suffer as well. It's a whole domino effect.
ReplyDelete-Daisy Guan
The Solow Growth Rate does not depend on the rate of inflation. Agricultural economy: good weather and bad weather increase or decrease production. For example, if their is good weather it can help increase crop production which drives the growth rate up, while bad weather decreases the production driving the growth rate down. (p.244). The weather, wars, new technologies, strikes, changes in important inputs like oil are all called real schocks or productivuty schocks. These shocks increase or decrease the economy's ability to produce goods or sevices which decrease or increase the Solow Growth curve. A negative real shock shifts the Solow growth curve to the left. The Solow growth curve is always shifting back and forth as new shock hit the economy. As my classmates mention war, fear and lost homes are all importnat real schocks that affect the Solow growth curve.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI believe that the most recent recession was caused by the war. I would like to say this real shock caused the downturn. The war is one of the negative shocks which can shift the Solow growth curve to the left. And then, real GDP growth rate will decrease. Also, fear in economy, higher taxes, and other factors from the war can make people are afraid to spend money. So, it can affect negatively to AD and growth rate.
ReplyDeleteSang-Ah Kim
I think that the war was one of the downturn that caused the current recession. Also, it was kind of the real shock. The war affected many things negatively that people should pay a lot of money for government because government should pay money as the cost of the war. I think that this situation can affect the Solow growth curve that Solow growth curve’s line will shift to the left. In a word, war will cause higher tax, expensive oil price, and so on. For this reason, people start to spend money less than before. People’s behavior will decrease consumption because people do not like to spend their money for the war. Also, companies which are related to the war will not invest a lot. Finally, if these circumstances cannot stop immediately, AD and growth rate will decrease consecutively. Also, people are faced with negative economical situation.
ReplyDeleteMyung-Rae Kim
I think one of the biggest contributors to the recession was the crash of the housing market. The down fall of the market led to the loss of jobs as well as in increase in taxes. With no jobs there wouldn't be money made and then there wouldn't be any spending as well which I believed led to the recession
ReplyDeleteKim nguyen
i believe it was the fall of the housing market that contributed greatly to the economic downturn the last 4 years. when the the housing market collapsed it took many other markets with it. and with that came shocks such as people fearing another downturn so they hold on to their money, which lead to a slower economic growth rate, and reduced wealth. it also doesnt help that taxes increased.
ReplyDeleteTheir are plenty of reasons for downturn in the U.S between the time period of 07-08. The war was the biggest cause of recession because we started paying our taxes towards the war for them to put towards the things necessary for war. Another major downturn for us would be gas. We are forced to pay these high prices, knowing that it is a necessity so we have no choice but to buy it. the fact that we are in a recession we have no extra money to spend.
ReplyDeleteasyia romain
I think the two shocks had the biggest impact on the downturn were the wars and a lack of confidence by consumers. The wars had a negative impact because of all the money that was being used to fund them. And the consumers in the U.S. had a lack of confidence so they weren't spending that much. These were both negative shocks.
ReplyDeleteAs mentioned previously by my fellow classmates, I would have to agree that the two major shocks that lead to the recession in December 2007 was the current war and fear. Our government has spent an excessive amount of time and money on a War where they have no idea what will come of it. People have this fear of a war, so they decreased their spending which also had a huge negative effect on the economy
ReplyDeleteI would have to say it was spending shock. Were as Americans were putting all of taxes dollars into the war. And the government was spending money excessive to try to win the war. They were only looking at for war but they should have been looking out for another things going on in home front. Such as the house market and how people credit been to go sour.
ReplyDeleteI believe the biggest shock to the economy was the fear of spending. No one bought gas or other necessities. They used what they had and didn't do any frivolous spending that combined with the war and the credit crisis made us head to the downturn of our economy
ReplyDeleteI believe that we are in this recession because of the real shock "fear." As it is not everyone is doing well in the economy and those that are are too afraid of spending their income in any good investments that is needed for our economy to better itself, like buying a home or a vechicle. And with these oil prices they will just be more fearful to purchase goods.
ReplyDeleteI think that there were many shocks that played a part in the recession in our economy. The main shock I think was fear because we went to war. I think that this made Americans uncertain in the government causing people to spend less.
ReplyDeleteBrian Linton
I think the main shocks that caused the downturn in the economy are fear and war. We fear for war, gas prices, taxes, jobs, debt, etc. All of these topics have caused us to be afraid to spend money. With all of this in mind, hopefully our economy will adjust and we will be at peace in the near future.
ReplyDelete-Ashley Rice
In my opinion, the war caused the most recent recession. Also, real shock makes the downturn. In the Solow growth curve, the negative shocks can move left because of the war. In this sense, real GDP will decrease. Moreover, there are many factors which make people don’t want to spend money. That will have negative impact on AD and growth rate. Many factors can be high taxes, fear in economy and so on.
ReplyDelete- Sora Ko
After reflecting back to 2007, I believe that the increasing prices of oil was one of the most crucial real shocks that caused the economic downturn. As prices of oil climbed, people became reluctant to drive as often as they once did, which also contributed to decreased spending trends. Moreover, as unemployment rose, and foreclosures crowded once lively neighborhoods, brought fear into the unaffected citizens causing them to reduce the spending of their funds.
ReplyDeleteWhen looking back at 2007, the beginning of the recession, I feel that the current war is what caused the recession, with the real shock causing the downturn. It is because the war was a negative shock, shifting the Solow growth curve to the left, that leads the real GDP growth rate to decrease.
ReplyDeleteI think the main shock of today's recession is the war that is happening. I think it took a down turn in the economy and people are "fear" to spend because they are afraid they might have nothing else to support their family. People spend less stuff that are not necessary and because a lot of people are unemployed that can also be part of the down turn in the economy.
ReplyDeleteAlthough The War is one of the real shocks I think another one was the change in spending habits of the US and also the rise in prices of consumer goods ( gas and groceries for example) we went from everyone living lavishly and many outside their means to people being forced to save money and instead of keeping up with the joneses they are now forced to keep up with their bills.
ReplyDeletei believe the real shocks come from living increases and the overseas war.
ReplyDeletesince December 2007 people stop spending which hit the economy hard and caused real shock. everyone just stopped spending and starting saving and it was a worse choice.
-german coreas
I think that the downturn was caused by fear in great part. As people became aware that there was a recession they began spending less. The decrease in wealth also led to the fear of the people because spending had to be controlled to cover all expenses. Weather could have also been a reason because it caused losses to the country.
ReplyDeleteIn my opinion the shocks that hit the hardest during the recession was the slow of money growth and fear. People stopped spending and prices went up, including gas prices and home prices plummet. If the spending growth decreases GDP deceases, fear also take GDP down putting us into the recession. If people stop spending it disrupts the cycle of the flow of money. To stimulate the economy we need to start putting money back in to it, but if everyone is afraid to spend and start saving money the shock impacts in a negative way.
ReplyDeleteI think there are many different shocks that led to the recession, but the main one being spending. We spent so much money towards the war on Iraq and I think with the economy being shaky as it is, it brought us over the edge and into the recession.
ReplyDeleteThe most recent recession which authorities say began in December 2007. I believe the War in Iraq is to be blamaed for part of the recession in 2007. But I also believe there is more to the recession then the War. Taxes that are due to the War. Jobs not being offered anymore and companies trying to save money because consumers are not spending any money. Its a combination of things I believe but I think the War in Iraq is a cause to the Recession. Spending shocks is due to people not spending and actually saving. Keeping the Car they have owned that is paid off instead of purchasing a new one with a payment. This is something that effects all businesses because consumers are saving money they are bringing in. So I believe the War in Iraq is one cause but there are many more causes for the Recession.
ReplyDelete-Kenny Pigman
To me the major shocks of the recession was the stock market taking a huge downturn for the worst. A lot of money was lost, businesses became bankrupt and in order to stay in business had to fire some of their employees. People became fearful of losing their jobs so they would cut spending to a minimum which is a lot worse for the economy bc business weren't making money. when no one spends money, our economy cannot grow.
ReplyDeleteThere are numerous shocks to which have effected society on the most common levels, the numerous natural disasters these last couple of years, Haiti and Chile for example, these countries turn to us for help, and of course people in terrible times, get introspective about certain situations causing them to have more obvious concerns for how the act in their day to day lives.
ReplyDeleteIsmael Navarro
The biggest downturn of the economy was the wars that were being fought in Iraq and Afghanistan. Those wars cost money and more money was generated for war than for american people. Americans were also skeptical in their spending.
ReplyDeleteManuel Marroquin003717102
I agree with some students, when thinking about the recent recession in the United States, I think the major shock that led to our current situation is the shock of being in two wars really played a big role in making people feel anxious. Because of peoples’ uncertainty, I think the sudden overall decrease in spending was the second shock to hit the United States which help lead to our current recession.
ReplyDeleteI think U.S economy was in a downturn from December 2007, there are many shocks affected the economic, first of all, war are the most important reason why it goes down. War will cause higher tax, also will cause higher unemployment rate. Actually, I found that price of gasoline is going up quickly, housing bubble is also the reason cause the economic problem.
ReplyDeletei think that one of the biggest things that started the downturn in our economy was the failure of our financial institutions. many banks bailing out and businesses failing, causing several people to lose homes and jobs and everything just increasing in prices. with everything going on people become very fearful and try to save what they have in case they were to lose their homes or jobs.
ReplyDeleteI believe as many of the students above do, that war was a major shock. It created fear in the people. And fearful people do not go out and spend money on vacations and other luxuries. The war gave us higher taxes, and well just higher prices in a lot of things. There were probably other shocks, but I believe that the war is a major one.
ReplyDeleteI believe us getting into a the war was the start to the recession, but our actions afterward is was fueled it. As the war prolonged we began to get conservative with our income and the housing crisis in california played a significant part in our conservation as well.
ReplyDelete-Desmond Ratliff
as many people have stated above, the war was a huge part of the recession. it shifted the solow growth rate curve left(negative). and i also believe that people starting saving their money instead of spending which could of put them in to debt.
ReplyDeleteTo touch on a on the first comment posted, Obama redirected the course of war in the correct theater, that being of Afghanistan, where the U.S should have been in the first place.... not Iraq, over some personal vendetta. But yes fear took place in the downturn, fear that the fed and gov, weren't regulating the financial sector like they should have been... greed caused the collapse... the rich made out, and the poor took the hit.... causing a hault in lending and spending.... being that there is the reality that most folks are "poor" not "middle class" ( a term that is used because we do not want to be politically incorrect), so most folks paniced... pulled their money outta banks, let their mrtg default, etc...
ReplyDeleteThe cause of the downturn in late 2007 I believe was due to not only the war going on across seas with oil prices rising, but also due to the credit crisis with so many banks investing in mortgages that were just too risky. Both these two events have cause real shocks in our economy. Not only have people become fearful, but they are unwilling to take any further risk due to these events.
ReplyDeleteI believe real and spending shocks caused the United States to fall into the recession. I believe what started it all was the wars and problems we have been facing with the Middle East. After that I believe several shocks happened that made the downturn worse such as fear, and higher taxes.
ReplyDeleteMelody Nash
I can say war makes America face shock. America was the one of powerful economy nations in the world, and thats why Iam here to study. However, after the war is occured U,S fell into the recession. And i think there is one more problem. Sub-prime mogage loan also brought shock in U.S.
ReplyDeletein my opinion, it was a series of domino affected shocks. i belive publicly it began with the 9-11 attacs, then the US entering the war in 2003, followed by the housing market fall in 08, then the raise of taxes, and to now nobody spending their money. all these shocks have shifted the curve moslty to the left. people are barly making and they are not spending .
ReplyDeleteI believe these shocks are by the disputes and war that the U.S. is/got involved in the Middle East. And i agree with shanemassoud, people started to get nervous with whatever disasters may happen and what to save what they can to prepare for the next Cold War.
ReplyDelete-Nicolette Afable
Consider the most recent recession which authorities say began in December 2007. Review the list of real shocks and spending shocks reviewed in class. In your opinion, what type of shock (or shocks) caused the downturn? Offer a couple sentences of explanation.
ReplyDelete1999: emergence of new internet age
2000: Fear of YTK
2001: 9/11 attacks on World Financial Trade Center, disrupting global economy, and sending fear into Americans.
2002: WAR ON TERROR "invade middle east" , Israelis and Palestine's conflict, UN partner up against Iraq.
2003: America Collapses Saddam Hussein/ Nukes found in Iran/
2004:Rise Of The House Market Bubble
2005: Asia Tsunamis, 7.5 earthquake Pakistani- Kashmir, Patriot Act, Hurricane Katrina. Dead Sea Scrolls.
2006: Decline in the banking system, bubble burst housing market, wal-mart takeover of retail market.
2007: Bankruptcy of banks, foreclosure of house, un-employment rate increase, recession
Reviewing 2007, I think that the price of oil was one of the most drastic real shocks that our economy experience. I think that the price of oil therefore gas could have also contributed to the unemployment rate as far as discouraged workers go. No one had any desire to drive anywhere or to take any initiative because as gas was going up so was things like health care and other insurances. Since 2007 people really couldnt afford to just live.
ReplyDeleteThe biggest shock that the US experienced when it comes to the Great Recession was the Housing bubble bursting. everyone is talking about the war and how it breeds fear and costs money. Of course those things occurred, but we are already in billlions of dollars of debt, and it seems like every other month were going to war with/going into some country. Theres no way that this just caused the greatest recession of our history. When the housing bubble burst, we had millions of people without homes, banks that didnt want to loan money out for people in order to GET homes, and a trickle down effect of so many other things (such as overseas business and this also contributed to the lack of jobs) ...
ReplyDeleteI definitely think the war had a huge part in where we are today. Everyone questioned the reason behind going to war and because of this it made us question our governements decisions. As most people mentioned, this eventually led to fear and probably a decrease in spending and investing etc.
ReplyDeleteFor the most part, Americans currently live in fear of losing everything in an instant. Looking around at their neighbors and other people they know (which have lost their house, cars, etc) is enough to convince themselves that there is a big risk on losing everything they own. This all began with things like the Stock market crash and businesses closing. The war was the cherry on top, injecting more fear into the common American. Like other classmates have already said, the media is really good at zooming in on the problems, making them appear as worse than they really are.
ReplyDelete