Tuesday, August 16, 2011

Recession of 1990?

The story of the 1990-1991 recession begins in mid-1990, when iraq invaded kuwait. Kuwait and Iraq's oil was taken of the world market. Reduction of oil supplies resulted in a rapid and substantial increase in the price of oil. Use an Aggregate demand/Aggregate supply diagram to illustrate the impact of the shock on real GDP and price level.

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