Understanding the Great Recession

The Great Recession, from December 2007 to June 2009, was a severe economic downturn in the US, second only to the Great Depression. It was primarily caused by the subprime mortgage crisis, where banks issued risky loans to borrowers with low credit ratings. The housing market boom led to a bubble that burst in 2007, causing home prices to plummet and leading to widespread foreclosures. This collapse affected financial institutions and the broader economy, resulting in job losses, business closures, and government interventions. The recession's effects were felt globally, and its full significance is still being understood.

What period did the Great Recession span?

• 2009 to 2011

• 2011 to 2013

• 2005 to 2007

• 2007 to 2009

What was identified as the primary cause of the Great Recession?

• Trade deficits

• High unemployment rates

• Subprime mortgage crisis

• Stock market crash

What is a subprime mortgage?

• A loan with a fixed interest rate

• A loan given to borrowers with high credit ratings

• A loan given to borrowers with low credit ratings

• A loan with no interest

Why did banks start issuing subprime mortgages in the early 2000s?

• To decrease interest rates

• To increase home ownership

• Due to a booming housing market

• To reduce lending risks

What happened when the housing bubble burst in 2007?

• Demand for real estate surged

• Banks reduced interest rates

• Home prices increased

• Home prices dropped rapidly

What was a direct consequence of the housing market collapse?

• Foreclosures increased

• Banks gained profits

• Increased home sales

• Interest rates dropped

How did the Great Recession affect employment in the US?

• Unemployment remained stable

• Employment rates increased

• Over 8 million jobs were lost

• Job opportunities doubled

What action did the US government take in response to the financial crisis?

• Increased taxes

• Bailed out banks

• Reduced national deficit

• Closed financial institutions

How many homes were foreclosed each year during the Great Recession?

• Nearly 1 million

• Nearly 2 million

• Nearly 3 million

• Nearly 4 million

What long-term effect did the Great Recession have on the economy?

• Immediate recovery

• Decades to fully understand its significance

• No significant impact

• Permanent economic growth