events in the economy Flashcards
the banking crisis of 2008 causing banks to stop lending
analysis
consumer can’t borrow so fall in consumption
business can’t borrow to invest so fall investment
as shifts inward
the uk has experienced fall in price level and Rno has fallen
the banking crisis of 2008 causing banks to stop lending
eval
if the fall investment persists for a while the the quantity and quality of FOP will reduce. as firms fail to renew their capital equipment stop training their labour force and neglect to invest in improving their land productivity the supply side proactive potential will reduce
a rise in the price of crude oil
analysis
a firms cost of production will increase
so sars will shift to cars 1 this reulkts in a movement along the ad curve. producers are more expensive and so people buy less
a rise in the price of crude oil
eval
the long run
if no alternative to oil is found then lars could shift in as forms struggle to absorb these higher cots and make decent profits, leading them to cut investments or even close altogether.
