Q.1.What do you think happened to gross domestic product (GDP) in the USA in 2008?

Explain
why, by referring to the formula for GDP.

Ans. In 2008, the United States experienced a significant decline in its Gross Domestic Product
(GDP). The primary reason for this decline was the global financial crisis, which originated in
the United States and had widespread effects on the global economy.

Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced
within a country's borders during a specific period. It is calculated using the following formula:

GDP = C + I + G + (X - M)

Where:

C represents consumer spending

I represents investment spending

G represents government spending

X represents exports

M represents imports

During the financial crisis of 2008, several factors contributed to the decline in each component
of the GDP formula:

Consumer Spending (C): The crisis led to a decrease in consumer confidence and a decline in
household wealth due to falling housing prices and stock market losses. As a result, consumers
became more cautious with their spending, leading to a reduction in overall consumer spending.

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Investment Spending (I): The crisis caused a severe tightening of credit and liquidity in the
financial markets. Banks faced significant losses from mortgage-backed securities and other
risky assets, leading to a decrease in lending. This reduction in available credit made it difficult
for businesses to obtain financing for investment projects, resulting in a decline in investment
spending.

Government Spending (G): While the government took measures to stabilize the economy during
the crisis, such as implementing stimulus packages and bailing out troubled financial institutions,
these measures were not enough to counterbalance the overall decline in economic activity.
Government spending may have increased to some extent, but it was insufficient to offset the
decreases in consumer and investment spending.

Exports (X) and Imports (M): The global financial crisis had a ripple effect on economies
worldwide, leading to a contraction in international trade. As demand for goods and services
decreased globally, U.S. exports were negatively impacted. Additionally, due to the economic
downturn, domestic demand for imported goods decreased, resulting in a decline in imports.
Both factors contributed to a decrease in net exports (X - M).

Considering these factors, the decline in GDP in the United States in 2008 can be attributed to a
decrease in consumer spending, investment spending, and net exports, as well as insufficient
government spending to counterbalance these declines. The financial crisis disrupted the normal
functioning of the economy, leading to a contraction in economic activity and a decline in GDP.

2. Investigate USA economic growth: Go to

https://tradingeconomics.com/united-states/gdpgrowth. Manipulate the graph so that you can
see 10 years’ worth of data, (click on 10Y button below the graph), and write down what you can
see on the graph that is interesting.

Ans.

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From the graph above we can see during 2014 to 2018 there was consistence growth of economic
condition . where the rate was between 0 to 5%. In 2016 the graph was about to touch 0. So
clearly we can see there was not so much progress during that period. But from 2016 to 2018
there was a slight rise in the graph where the rate increase about 2 to 3%.

Again if we see the graph we can see a fluctuation in economical growth during 2018 to 2020.
Where the graph shows that from 2018 to 2019 there was a consistence growth. And the GDP
because the GDP once again about to touch 0%.

But the interesting part comes during 2020 to 2022. During this period there was a rise a rise and
fall of GDP because of the pandemic. If we see in 2020 the GDP fall under -20%. Which is
really a great fall for a county. But suddenly we can see a huge rise where the GDP of the
country rocketed up and it crossed 20% which is really a good rise. Then from 2021 to 2022
there was a sudden fall and it came into 20%.

Lastly from 2022 to now the economical growth of USA is constant and progressing

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3. Ensure you have completed the glossary activity for the words ‘downturn’ and ‘recession’.
(Know these definitions!) Did the USA experience a recession in 2008-09? Or was it simply a
downturn? Explain your answer

Ans.Recession: A recession is a long period of continuous economic decline that is evident in

real GDP, real income, employment, industrial production, and wholesaleret run more than a few
months. Downturn : ail sales. Recessions typically a move in the wrong direction, particularly
one that would see business and economic activity collapse. Yes, USA Did Experience A
Recession In 2008 known as the "Great Recession09 . The Global Financial Crisis (GFC),
sometimes ," did affect the United States between 2008 and 2009. It was a serious economic
contraction, not just an ordinary downturn, with a major impact on both the local and
international l evels. A number of events, including the implosion of the housing bubble, broad
market instability, and following collapse of numerous significant financial institutions,
contributed to the recession. These things caused a credit crisis to worsen and a dra matic drop in
investor and consumer A number of companies led to layoffs, decreased consumer spending, and
a fall in economic activity . The recession's severity can be seen in the GDP's (gross domestic
product) drop during that time. The US economy shrank in real terms by 0.1% in 2008 and 2.5%
in 2009, respectively. These decreasing growth rates are a sign of a recession. Finally, it is
commonly claimed that the US economy's fall from 2008 to 2009 was a recession. The economy
significantly decreased jobs we lost, the financial markets became unstable, and GDP growth
rates became negative

4.Investigate Bangladesh’s economic growth: Go re to

https://tradingeconomics.com/bangladesh/gdpgrowth . Manipulate the graph so that you can see
10 years’ worth of data, (click on 10Y button below the graph), and write down what you can see
o n the graph that is interesting

Ans.Trading Economics estimates that Bangladesh's GDP increased by 6.06% in 2007 and
7.28% in 2017. he GDP growth rate in Bangladesh has also been rising over time. The

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Bangladeshi ec onomy grew by 7.25 percent in 2022, the fastest rate of growth since 2019 and a
rise from the 5.47% increase in 2021. Trading Economics estimates that Bangladesh's GDP
increased by 6.06% in 2007 and 7.28% in 2017. The GDP growth rate in Bangladesh has also
been rising over time.

The Bangladeshi economy grew by 7.25 percent in 2022, the fa a rise from the 5.47% increase in
2021.

The graph from 2006 to 2016 shows the GDP gr owth of B only suffered downturn not recession
for its robust Gar angladesh whi men ch shows that ts industry, Bangladesh less connected
banking system, focus on domestic consumption, and dependence on the apparel industry,
Bangladesh's economy displayed endurance . Like almost every other country Our in the Great
depression era of 20082009. ’ s economy shrank to 5.05% And in the next years Bangladesh
boosted rising upto 7.1% in 201 6. ,s economy just boosted rising upto 7.1% in 2016.

5. Did Bangladesh experience a recession in 2008 your answer.

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Ans.In 2008–- 09? Or was it simply a downturn? Explain 2009, Bangladesh Went Through A
Downturn, Not A Recession. crisis had an effect on the country's economy, but it was not a The
global financial s bad as it was in some other countries. Due to its less connected banking
system, focus on domestic consumption, and dependence on the apparel industry, Bangladesh's
economy displayed endurance. During the 20082009 global financial crisis, Bangladesh's e
conomy showed remarkable endurance. The impact has been small and restricted to a slight
decline in the economy because Bangladesh's economy demonstrated exceptional strength in the
face of this severe global crisis. The gross domestic product (GDP) increa sed at a healthy 6.19
percent annual pace in FY2007 2008. Growth is estimated to be 6.0% in 2008–– 09, which is a
little slower than in prior years, according to the Policy Analysis Unit (PAU) of the Bangladesh
Bank drawn to the fact that [3] . The curta ins can be Bangladesh appears to have gone through a
downturn rather than a recession during that time.

6.Investigate another country of your choice on the Trading Economics website (If your selected
country match with any other classmate, all of you will get zero in this section). Look at its GDP
growth rate. What happened in approximately 2008-09? Can you find a country that
experienced an ‘upturn’ (expansion) during this time period?Germany's 2008-09 Recession

Ans.Germany's GDP growth rate during the 2008-2009 period.

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During 2008-2009, Germany, like many other countries, experienced a significant economic
downturn primarily due to the global financial crisis that started in the United States. The crisis
had a profound impact on the global economy, leading to a contraction in economic activity in
various countries.

Germany, being a major global economy and an export-oriented country, was particularly
affected by the crisis. Its GDP growth rate slowed down considerably, and the country entered
into a recession. The crisis impacted Germany's manufacturing sector, which heavily relies on
exports, as global demand decreaed. Unemployment rates increased, and the government
implemented stimulus measures to mitigate the effects of the downturn.

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7. Choose any country to investigate on the Trading Economics website (If your selected country
match with any other classmate, all of you will get zero in this section). Discuss and write down
what you think the difference is between ‘GDP growth rate’ and ‘GDP Annual Growth Rate’.

Ans.The terms "GDP growth rate" and "GDP annual growth rate" are closely related but have a
slight difference in their meaning.

1. GDP Growth Rate:

The GDP growth rate refers to the percentage change in a country's Gross Domestic Product
(GDP) from one period to another. It measures the rate at which the economy of a country is
expanding or contracting over a specific period, which can be quarterly or annually. The GDP
growth rate can be positive (indicating economic expansion) or negative (indicating economic
contraction).

For example, if Germany's GDP in 2020 was $3 trillion and it grew to $3.3 trillion in 2021, the
GDP growth rate for that period would be calculated as follows:

GDP growth rate = ((GDP in 2021 - GDP in 2020) / GDP in 2020) * 100

2. GDP Annual Growth Rate:

The GDP annual growth rate specifically refers to the percentage change in a country's GDP over
a one-year period. It provides an annualized view of the economic performance of a country. The
GDP annual growth rate is often used to assess the overall health and stability of an economy.

Continuing with the previous example, the GDP annual growth rate for Germany between 2020
and 2021 would be calculated as follows:

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GDP annual growth rate = ((GDP in 2021 - GDP in 2020) / GDP in 2020) * 100

The difference between the two terms lies in the time frame over which the growth rate is
measured. The GDP growth rate can be calculated for any specific period, such as quarterly or
monthly, while the GDP annual growth rate specifically refers to the growth rate over a one-year
period.