Question

08-2009 recession. ad the article from Reuters in the box below, and then answer the questions that follow. U.S. Economy Plummets by Lucia Mutikani February 27, 2009 WASHINGTON (Reuters)-The U.S. economy suffered its deepest contraction since early 1982 in the fourth quarter, shrinking at a much worse-than-expected 6.2 percent annual rate as exports plunged and consumers slashed spending. A month ago, the Commerce Department had estimated the economy shrank at a 3.8 percent pace in the fourth quarter. But downward revisions to inventories, exports and spending led it to issue a much weaker figure on Friday, just shy of the 6.4 percent rate drop seen in the first quarter of 1982, when the economy was in a recession that lasted 16 months. "They (numbers) show a very depressed state of the economy at the end of last year and point to it continuing to be equally bad in the first part of 2009," said Bill Cheney, chief economist at John Hancock Financial in Boston. "This is really as bad as we thought it was before they originally released the numbers. It ccording to the article, in the fourth quarter of 2008 the U.S. economy suffered its deepest contraction since

Answer 1

The economy suffered it deepest contraction since exports plunged or exports demand fell very much which leads to fall in net exports and overall GDP . Also consumers slashed spending , consumer spending drives the economy since it increases aggregate demand . Fall in consumer spending leads to dampening of economic growth .