In 2007 and 2008 the U.S. economy encountered the perfect storm. At the beginnin

In 2007 and 2008 the U.S.
economy encountered the perfect storm. At the beginning of 2007 oil prices
more than doubled. A financial crisis hit the economy starting in August 2007
causing a reduction in consumer and business spending.These events led to a rise in the
unemployment rate from 4.6% in 2007 to 5.5% by June 2008 with the inflation
rate rising from 2.5% in 2006 to 5% in June 2008.After July 2008 oil prices
fell sharply.However in the fall of
2008 the financial crisis deepened the stock market lost over 1000 points and
house prices declined sharply. As a result the unemployment rate rose to 10% by
the end of 2009 while the inflation rate fell to 2.8%.Using the Aggregate Demand-Aggregate
Supply Model explain and illustrate
these events.
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