Explanations by Great Economists
Edited by G. Page West III and Robert M. Whaples
These are surely trying economic times. True, modern economies have continued to push back the boundaries of scarcity. Real incomes in virtually every country of the world have risen strongly over the past decades – giving us standards of living that our grandparents, great-grandparents and more distant ancestors could only dream about (Maddison, 2001). But, the domestic and international economies have been rattled by recent events. In the wake of the 2008 financial crisis, the median net worth of American households fell from $126,400 (2007) to $77,300 (2010) – wiping out nearly two decades of growth (Bricker et al., 2012). For the first time since the Great Depression, the US unemployment rate stubbornly remained above 8 percent for over four years. In August 2011, Standard and Poor’s downgraded the credit rating of the federal government from AAA to AA+ – and the fiscal condition of the US government looks increasingly cloudy due to projections of high budget deficits and climbing debt into the foreseeable future.
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