Question

In: Economics

Why did the USA have a great recession during 2007 to 2009 period? Was it cause...

Why did the USA have a great recession during 2007 to 2009 period? Was it cause by the financial crisis? Briefly explain. You may use parts of your research paper to answer the question.

Solutions

Expert Solution

USA had the great recession as mentioned that started due to the financial crisis. But, it was an event that led to the initiation of the chain of economic activities and recession was culminated in the US economy. It all started with the subprime lending done by the banks and financial industries to finance the real estate loans. When the real estate boom got busted, then value of real estate properties, decreased drastically and these assets were mortgaged at the banks ans financial companies. When people saw that their real estate property had no or very less value, then they refused to pay back the loans and defaulted. It brought a crisis and many institutions fell. It created job loss to many people and aggregate demand started to decrease. It led to decrease in supply by the firms and they also made laying of the workers and AD decreased further. Quickly, it spread to the whole US economy and showed its contagious effect to the other countries in EU and Asia. It brought great recession in the USA during that period and GDP growth became negative, unemployment was over 9% and inflation was way less than 2%. It was an indication that US economy is going through the recession.


Related Solutions

During the great recession of 2007-2009, did the US government take a page of the Keynesian...
During the great recession of 2007-2009, did the US government take a page of the Keynesian macro theory to help move the country out of recession? What did they create? Did it work?
2. How did the Federal Reserve’s actions during the Great Recession in 2007–2009 in response to...
2. How did the Federal Reserve’s actions during the Great Recession in 2007–2009 in response to the financial crisis affect its balance sheet? \
What is the Bank Regulations during 2007-2009 ( Great Recession ) ?
What is the Bank Regulations during 2007-2009 ( Great Recession ) ?GIVE DEFINITIONS ABOUT ALL OF THESE TERMS:TARP; HERA; Federal Housing Finance; Regulatory Reform Act of 2008; HOPE for homeowners act of 2008; SAFE Secure and Fair Enforcement for Mortgage Licesing Act of 2008; Forecosure Prevention Act of 2008 and FHA Modernization 2008; Emergency Economic Stabilization Act of 2008; Helping Families Ave Their Homes Act of 2008.
1. In your view, what was the cause of the Great Recession of 2008-2009? Did we...
1. In your view, what was the cause of the Great Recession of 2008-2009? Did we follow the proper steps to mitigate its effects? Explain. 2. What impact would federal spending cuts have on the current equilibrium level of economic activity? Would you favor such cuts? Why or why not? 150 words per question, please (:
What was the similarities and difference between the great depression and the great recession 2007-2009?
What was the similarities and difference between the great depression and the great recession 2007-2009?
During the recovery from the Great Recession of 2007-2009, the economic situation for many families improved....
During the recovery from the Great Recession of 2007-2009, the economic situation for many families improved. However, in 2011 the recovery was slow and it was uncertain as to how much had really changed on the national level. To estimate the national average of the percent of low-income working families, a representative simple random sample of the percent of low-income working families from each of the country’s reporting jurisdictions could be used to calculate a point estimate and create a...
Part 2: Confidence Intervals During the recovery from the Great Recession of 2007-2009, the economic situation...
Part 2: Confidence Intervals During the recovery from the Great Recession of 2007-2009, the economic situation for many families improved. However, in 2011 the recovery was slow and it was uncertain as to how much had really changed on the national level. To estimate the national average of the percent of low-income working families, a representative simple random sample of the percent of low-income working families from each of the country’s reporting jurisdictions could be used to calculate a point...
11) (≈ 21 ???) The 2007-08 Financial Panic and The Great Recession 2007-2009: Declines inwealth due...
11) (≈ 21 ???) The 2007-08 Financial Panic and The Great Recession 2007-2009: Declines inwealth due to the fall in housing prices decreased “autonomous consumption”. In addition the financial crisis (bank runs) induced banks to decrease lending which decreased investment spending. a) Draw the Multiplier Model graph and indicate on your graph which way the Aggregate Demand (AD) curve shifts and what happens to equilibrium Real GDP due to declines in both autonomous consumption and investment. Be sure to label...
Please do it by type not pics. 1.The Great Recession (2007 to 2009) changed the nature...
Please do it by type not pics. 1.The Great Recession (2007 to 2009) changed the nature and direction of the macroeconomic debate because: a.the financial crisis threatened to collapse the entire economy, an outcome not predicted by classical models. b.the prior direction of the macroeconomic debate was on the New Classical and Real Business Cycle models. c.the technology boom of the 1990s seemed to validate the Real Business Cycle model. d.of all of the answers in this question. e.the recession...
TOPIC: Achieving monetary policy goals and the Great Recession of 2007-2009. A) What are the Federal...
TOPIC: Achieving monetary policy goals and the Great Recession of 2007-2009. A) What are the Federal Reserve's established economic goals? B) What are the policy tools that the Fed directly controls? What are the policy instruments and intermediate targets? C) What were the contributing factors to the Great Recession of 2007-2009? D) What were the unconventional monetary measures that the Fed used to combat the recession? E) How did international policy coordination help keep the Great Recession from becoming an...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT