The nature of the Global Financial Crisis (GFC) was primarily a negative short-run aggregate supply shock.

Question

Quizplus · Accepted Answer

The GFC was primarily a negative demand shock, as there was a significant decrease in consumer and investor confidence, leading to reduced spending and investment. This resulted in decreased aggregate demand and output. While there were some supply-side factors such as the subprime mortgage crisis and subsequent collapse of the housing market, the overall impact was primarily demand-driven.

The Nature of the Global Financial Crisis (GFC) Was Primarily