final essay preparation the “great recession” of 2008
TRANSCRIPT
Final Essay Preparation
The “Great Recession” of 2008
Final AP Essay
1. Briefly discuss the major economic challenges facing the USA.
2. Analyze 2 important solutions to the structural problems facing the USA which will help it prosper in the 21st century
80 points40 minute college level essayUse at least 2 AP Econ Graph in your essay
Speculative Bubbles
Holland 1634 - 1637
1996 - 2000USA 2002 - 2007
Economy 2000 - 2012
Caused by
Credit Bubble
Led to
1996 - 2000
U.S. Economy in 2012
AD1AD1
LRAS1PriceLevel
RealGDP
SRAS1LRAS1PriceLevel
RealGDP
SRAS1
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Major Economic Challenges
1)
The American Dream?
http://www.npr.org/2012/05/29/153513153/american-dream-faces-harsh-new-reality
New Labor TrendsOver the past 15 years Labor has significantly changed
Globally:Globalization: “free trade” with other countries
Collapse of Soviet Union & Communist EconomiesChina & India emerge as economic powers (GDP growth > 10%)
European Union forms common currency (now what?)
Worldwide free flow of financial capital & labor (financial crisis)
United States: Unions are declining in power Less “Job Security” Declining Manufacturing Jobs Rising Demand for Educated Workers
↑ Gap between Rich & Poor
Bottom 20% Top 5%
Income Distribution
+56.0%+ 1.0%Change:
The pay gap widens in USA!
Qty
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Low-Skilled Labor
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College Educated Labor
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College Educated Labor
D2
D2
Top 1%
Great RecessionSlow Recovery
Slow Job Growth---Declining Labor Force Participation
GDP GDP GDP
What creates real economic growth?
AD1AD1
LRAS1PriceLevel
RealGDP
SRAS1LRAS1PriceLevel
RealGDP
SRAS1
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Keynes vs. Hayek
• http://www.youtube.com/watch?v=GTQnarzmTOc
Animal Spiritsversus
Malinvestment
What Good Are Economists Anyway?
Economic Solutions?
Inside Job
FNMA & FHLMC
Government takeover
AIG Insurance Company
Government Takeover
Wall Street Firms Bankrupt or Bought
Bear StearnsMerrill LynchLehman Brothers
Current Problem
Gov’tTakeover