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In the fall of 2007,it was clear that the U.S.economy was slowing.The unemployment rate rose from 4.4% to 5% between May and June 2007,and real GDP grew by just 1.7% in the fourth quarter.The U.S.economy officially entered the recession in December 2007.We now know that the nation's economy was entering several years of low growth and high unemployment.Many economists believe that a decline in aggregate demand was one cause of the recession.What did the Federal Reserve do in response to this decline in aggregate demand?
Physical Capital
Assets that are tangible, such as buildings, machinery, and equipment, which are used in the production of other goods and services.
Manufactured Resources
Goods that have been processed or created through manufacturing, used in the production of other goods or services.
Derived Demand
The demand for a factor of production resulting from the demand for the final product it helps to produce.
Factor of Production
A rephrased definition would be the essential elements required for producing goods and services, encompassing land, labor, capital, and entrepreneurship.
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