Monday, February 16, 2009

Unit 2: Japan in deep recession

Japan's economy contracted by over 3% in the last quater of 2008 according to the BBC

http://news.bbc.co.uk/1/hi/business/7891939.stm video
http://news.bbc.co.uk/1/hi/business/7891849.stm article

a) Using the AD formula and an AD/AS diagram, , explain the decline in the Japanese economy
b) What role would the multiplier effect have on explaining this sharp decline?

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