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Consider the AS-AD model with money, where money is neutral. Suppose that half of the banks in the economy magically disappear. What will happen to the supply of credit? Problem 1: Debt Deflation and the Great Depression (50 points)

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Consider the AS-AD model with money, where money is neutral. Suppose that half of the banks in the economy magically disappear. What will happen to the supply of credit? Problem 1: Debt Deflation and the Great Depression (50 points) This problem is meant to walk you through the Fisher Debt-Deflation theory of how the Great […]

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