Your uncle is pleased to hear you are taking macroeconomics; this whole financial crisis puzzled him. He was not happy about "bailing" out the banks, and he asks you some questions. He is pretty good with graphs, so do not be afraid to use them to explain the following:
(a) How does the rapid decline of the housing market and the subprime implosion affect the
macroeconomy?
(b) And why, pray tell, would we bail out the banks? Aren't there potential long-run problems
with doing this?

Question

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The Answer of Your uncle is pleased to hear you are taking macroeconomics; this whole financial crisis puzzled him. He was not happy about "bailing" out the banks, and he asks you some questions. He is pretty good with graphs, so do not be afraid to use them to explain the following:
(a) How does the rapid decline of the housing market and the subprime implosion affect the
macroeconomy?
(b) And why, pray tell, would we bail out the banks? Aren't there potential long-run problems
with doing this?

Your Uncle Is Pleased to Hear You Are Taking Macroeconomics;