Question

In: Economics

What Happened During the 2007–2009 Recession? How were GDP, inflation, and unemployment affected during the recession,...

What Happened During the 2007–2009 Recession?

  • How were GDP, inflation, and unemployment affected during the recession, and how does the model show this?
  • What monetary policies and fiscal policies were implemented during the recession?
  • How did the recession affect U.S. trade relations and the U.S. dollar exchange rate?

Solutions

Expert Solution

Economic recession of 2007 -09 was caused by the sub prime loans crisis. it reduced aggregate demand massively and it resulted into widespread unemployment and fall in GDP. Fall in GDP motivated fall in output and employments. Fall in demand also dragged down inflation rate. Unemployment rate increased to 10 % of labor force.

Both monetary and fiscal policies were used by the government, to correct disequilibrium in economy. Expansionary fiscal and monetary policies were followed by the government and central Bank. Government announced huge bailout package to drive up positive sentiments in economy. Further, Fed infused liquidity through quantitative easing programs.

US trade fell severely and its relationships with trading partners hit rock bottom. But gradually, it was recovered. US Dollar exchange rate increased significantly. Main reasons behind it were: flight of capital from developing countries to USA. Second, supply of dollar was not enough. Investors grew suspicious about developing countries. so they considered it right to part their funds in US.


Related Solutions

As a result of the recession that began in 2007 and continued into 2009, the unemployment...
As a result of the recession that began in 2007 and continued into 2009, the unemployment rate rose to as high as 10 percent. By the time of the presidential and congressional elections of 2012, the economic recovery was under way, but the unemployment rate was still around 8 percent. The Republicans saw this as evidence that the Democrats’ economic policies had failed to deal with the lasting effects of the recession. They, in fact, blamed the lasting high unemployment...
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.
what caused the Recession 2007-2009
what caused the Recession 2007-2009
Is an allegory of what happened in the U.S. economy during the great recession of 2008-2009....
Is an allegory of what happened in the U.S. economy during the great recession of 2008-2009. Therfore, starting from a position of equilibrium in AD-AS, explain what happened to U.S. economy during the great recession of 2008-2009. what did the U.S. goverment and/or the Fedreal Reserve do to get the U.S. out of recession? What eventually happened in 2015-2016 to improve the U.S. economy, GDP, and unemployment, while also decreasing prices? (Explain graphically and writing)
The Economy was booming in 2006 and 2007 before the recession when unemployment rose and GDP...
The Economy was booming in 2006 and 2007 before the recession when unemployment rose and GDP fell. Where are we now? Like many things in economics, you can ask two economists and you will get two different answers on where the economy is. I want you to provide me with your opinion and back your opinion up with at least one resource.
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? \
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?
During 2007-2009, the global economy experienced a severe recession. To deal with recessionary gaps in their...
During 2007-2009, the global economy experienced a severe recession. To deal with recessionary gaps in their economies, many countries implemented expansionary fiscal policies to increase aggregate expenditures. Consider the following hypothetical responses (the actual policies were different in each country). In 2009, the government of the United States introduced a $675 billion stimulus package - additional government expenditures with no changes to the tax system. In Canada, the tax rate was reduced from 33 percent of GDP to 30 percent...
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.
During the financial crisis of 2007-2009 What were some of the claims made? What evidence was...
During the financial crisis of 2007-2009 What were some of the claims made? What evidence was provided to support those claims? What were some underlying assumptions that were held by the FED? Did those assumptions end up being true? From an economic perspective, think about the mechanism by which quantitative easing would stimulate the economy. How would it impact different economic sectors?  
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT