Background
________ Refers to a decline in the economy
Recession
Mention two causes of the 2008 Recession
- Immoderate investments and deregulation
- loose lending standards in the housing market
- Risky wall street behavior
- The Subprime mortgage crisis
- The stock market crash
Why should individuals avoid purchasing with credit when lacking cash?
leads to people spending what they don't have, increasing the chances of falling into debt.
The 2008 Recession was the 2nd most greatest financial crisis since the _______ which occurred in the 1930s.
Great Depression
Subprime mortgages
loans that were given to individuals with low credit rates and had a lax verification process
Having credible Banks will lead to?
Promote business and Industry
When did the 2008 Recession begin and end
Began in late 2007 and lasted until 2009
Deregulation
Reduction or elimination of government power in a particular industry
what is panic selling?
large-scale selling of investment (with little regard to the price obtained) that causes a sharp decline in prices. The investor is reacting to emotion and fear, rather than evaluating the fundamentals
prior to the 2008 recession, the was a boom in which industry?
Housing market
Explain the time period call the Great Moderation
(Hint 4 traits)
(1) Low Inflation. (2) Stable Economic Growth. (3) End of Uncertainty and Greater Risk-taking. (4) Rising Asset Prices
Explain the two aspects of the expansionary fiscal policy
Increasing government spending
Reduction in taxes (allows for more disposable income, encouraging spending)
Why was the financial crisis so widespread?
The main reason behind the crisis was uncontrolled debt. However, the crisis was only widespread because the loans were resold therefore creating a domino-like effect when people were unable to pay back their debt.
Why did Subprime Mortgages cause a crisis?
The interest rate spikes increased the monthly payments on subprime loans and many homeowners could not afford their payments.
Why should the government promote banks?
The Bank would be able to lend the government money and safely hold its deposits, give Americans a uniform currency, and promote business and industry