Describe the economic conditions of the Great Recession
What will be an ideal response?
The Great Recession began in late 2007 and lasted through the middle of 2009. It involved a sharp decline in housing prices that lead to a crisis in the mortgage market. Several major financial institutions that were involved in issuing or insuring financial instruments based on mortgages failed. These failures lead to a liquidity crisis in credit markets that affected the broader economy. As the economy faltered, unemployment rose from 4.7 percent to 10 percent. Economic growth fell during 2008 and turned negative in 2009.
You might also like to view...
Economists usually use the term "recession" to refer to:
a. any slowdown in the growth of real GDP. b. zero real GDP growth. c. two or more consecutive quarters of declining real GDP. d. a reduction in nominal GDP lasting more than six months.
Which of the following is NOT a component of the equation of exchange?
A. The price level B. The interest rate C. Real output D. The velocity of money
Consider a monopolist attempting to engage in limit pricing with total costs C(Q) = 100 + 2Q. The market (inverse) demand for its product is P = 100 ? 2Q. Currently, the monopolist produces 30 units of output. Assuming the potential entrant has the same cost structure as the incumbent monopolist, is it profitable for the entrant to produce 10 units of output?
A. No, since the market price of $20 is less than the average total cost of producing 10 units. B. No, since the market price of $50 is less than the average total cost of producing 10 units. C. Yes, since the market price of $50 is greater than the average total cost of producing 10 units. D. Yes, since the market price of $20 is greater than the average total cost of producing 10 units.
The typical age-earnings cycle shows that
A. there is a constant negative relationship between age and earnings. B. there is no relationship between age and earnings. C. there is a positive relationship between age and earnings that eventually turns into a negative relationship. D. there is a negative relationship between age and earnings that eventually turns into a positive relationship.