1. Explain the economic cycle of how the economy can spiral downward or upward.
A: The economy can spiral downward or upward very easily. If sales of a product declines, for example, then this loss of demand would mean loss of demand for the materials that were used to make that product. As a result, industry would slow, causing lower wages and unemployment which would help contribute further to the decline of sales for the product. Fewer sales would also contribute to lower sales, which would then lead to more job layoffs, causing the economy to spiral downward. However, if product sales do not decline, then there would a high demand for the materials harvested to make the products as well as for workers to manufacture it. Industry would boom, people would have money to buy the product, and the economy would spiral upward.
2. Explain how the Housing crisis of 2008 and the cause of the Great Depression are similar. (Complete Sentences on the back)
A: The cause of the Housing crisis of 2008 and the Great Depression are very similar. In 2008, a decline in housing prices caused by the collapse of a housing bubble triggered a nationwide banking emergency in the United States. This is very similar to the major cause of the Great Depression: the Stock Market Crash of 1929. This market crash was caused by the decline of stock values and contributed greatly to the Depression.
You seem to have a good grasp of both questions, as usual. I would not use a "product" as a cause of spirals, though Sales of consumer goods in general will cause spirals, but not one product. And raw materials sales alone won't cause a spiral. Wages do. If people have no money (or less money), they can't buy the autos and clothing, etc. When they have money, they consume goods. When home sales, for example, are down, contruction workers are not needed, so get laid off. Then they can't buy their own new houses or anything else, etc.
So should I change anything besides the term "product"?
Also, will you check my answers in my other posts>?
I just did check your other questions. No, I think if you just broaden your wording to make it not just A product to consumer goods in general, your answer is basically good.
Keep in mind that if, say, demand for automobiles is low and workers are laid off, all the suppliers of parts for cars and trucks will sell less and lay off workers, too. Those umemployed people will not have money to buy clothing, take vacations, buy new TV sets or furniture, etc., etc., etc., which then will cause lay-offs in those industries -- thus the spiral. And it works the other way, too. More demand means more employment and more money for people to spend.
To understand how the Housing crisis of 2008 and the cause of the Great Depression are similar, it is essential to analyze the key factors that led to both events. In the case of the Housing crisis of 2008, it began with a housing bubble, which refers to a rapid increase in housing prices fueled by speculation and unsustainable lending practices. Many individuals took advantage of low interest rates and easy access to credit to purchase homes, leading to inflated prices.
Similarly, in the lead-up to the Great Depression, there was a stock market bubble. In the 1920s, stock prices soared as investors engaged in speculative trading, often purchasing stocks with borrowed money. This excessive speculation drove the stock market to unsustainable levels, creating an artificial boom.
In both situations, the bubbles eventually burst, leading to severe economic consequences. In 2008, the housing bubble collapsed, causing a decline in housing prices. As a result, many homeowners found themselves with mortgages that exceeded the value of their properties, leading to widespread defaults and foreclosures. The banking sector, which had heavily invested in mortgage-backed securities, faced significant losses and a liquidity crisis.
Similarly, in 1929, the stock market bubble burst, leading to a sharp decline in stock prices. This loss of value wiped out fortunes and caused panic among investors. Banks, heavily exposed to stock market investments, experienced substantial losses, which triggered a banking crisis.
Both events had a domino effect on the economy. In the aftermath of the Housing crisis of 2008, the financial sector suffered significant losses, leading to a contraction in credit availability. This, in turn, affected businesses and consumers, leading to a decline in economic activity, job losses, and a recession.
Similarly, the Stock Market Crash of 1929 had a detrimental impact on the banking sector. Many banks failed, causing a loss of depositor confidence and a severe contraction of credit. The resulting economic downturn led to a decrease in consumer spending, business closures, and widespread unemployment, culminating in the Great Depression.
In summary, both the Housing crisis of 2008 and the cause of the Great Depression were preceded by speculative bubbles that eventually burst, causing significant economic downturns. The collapse of housing prices and the stock market crash led to financial crises, loss of confidence, and a contraction in economic activity, resulting in recessions and, in the case of the Great Depression, a long-lasting depression.