According to the News on page 159, a. by what percent did GDP decline? b. How much output was lost in the $14 trillion
According to the News on page 159,
a. by what percent did GDP decline?
b. How much output was lost in the $14 trillion economy?
c. How much income did this represent for each of the 300 million U.S. citizens?
I N T H E N E W S
Economy Shrank Last Quarter
WASHINGTONâ€”Signaling what could be the start of a prolonged recession, the government
said Thursday that the U.S. economy shrank in the Julyâ€“September quarter as consumers
slashed spending and businesses pulled back.
The Commerce Department said gross domestic product, the broadest measure of goods
and services produced in the USA, fell at a 0.3% annual rate in the third quarter. Consumer
spending, two-thirds of economic activity, plummeted at a 3.1% rateâ€”the steepest fall since
1980. The overall decline was the worst since the 2001 recession.
Source: USA TODAY, October 31, 2008, B1. Reprinted with Permission.
Analysis: Everyone agrees that the macro economy can contract on occasion. The debate is
whether such contractions self-correct or require government intervention.