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DBQ Great Recession

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The Great Recession was a period of general economic decline observed by world markets beginning around the end of the first decade of the 21st century. The recession was a result of a financial crisis in 2007 which effected the years to come . The primary source of this problem was that banks were creating too much money. In addition, banks had doubled the amount of money and debt in the economy. Resulting in a financial crisis as the government and banks had failed to constrain the financial system’s creation of private credit and money. The lack of responsibility in the government and banks led to the downturn in the economy now known as the great recession. (document I)

Starting in 2007 there was a noticeable increase in mortgage …show more content…

According to (document d) , mortgages lenders had raised prices on mortgages across America. In result, Americans were are unable to afford the cost of the mortgage and the mortgage lenders cannot get repaid. Therefore the lenders and their consumers were both at fault. The government's response to this situation was to pass the Affordable housing act. This act benefits buyers and lenders because it allows the buyers who are looking for housing even low income families to find housing within their budget. While the lenders get their money without having to inflate prices. Also, financial corruption from banks and wall street had influenced the creation of The Great Recession. There was predatory lending in the mortgage markets and banks had knowingly loaned millions of checks on mortgages . This led to a tremendous Economic crash as stated in (document e ). The government had resolved this issue by banning big banks from gambling with taxpayers money. The government also proceeded protect taxpayers by creating the Consumer Protection Act (document h). This act protects the rights of consumers to avoid …show more content…

Due to the common occurrence of recessions, americans now spend wisely and think about the future for their families (document f) .Unfortunately some baby boomers and caregivers worry about retirement because of the recession's impact on the economy(document e). Banks have now become stable and require a rigorous program on mortgage so they will avoid another downfall. The Great Recession could have been easily been avoided if the government had maintained and organized the economy more efficiently. Such as setting standards for banks and protecting consumers beforehand . If the banks were ordered by the government early on to have rigorous requirements, there would have not been a such immense economic

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Overall, it was the combination of the desire for money mixed with ignorance towards making quality financial decisions that led to the financial crisis. 2. In the past, to get a mortgage you had to go through a series of steps; list them. Show up at the bank with tax records, pay stubs (to verify your income) and proof that you have enough savings to make a 20% down payment

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These banks issued Federal Reserve Notes. The Federal Reserve Act was mainly put into action because the government wanted more economic

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The third agency that provided a great amount of relief was the Home Owners' Loan Corporation which lowered mortgages to stop foreclosures. Therefore, more people were able to keep their homes and homelessness

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The timing of these failures, the bank’s lack of dealing with them effectively, and the brevity of the Stock Market Crash caused the economy to suffer

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The government never gave direct relief like this before. America was going through the great depression. As a result, many people suffered

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In 2002, Ben Bernanke, then a member of the Federal Reserve Board of Governors, acknowledged publicly what economists have long believed. The Federal Reserve’s mistakes contributed to the “worst economic disaster in American history” (Bernanke 2002). Bernanke, like other economic historians, characterized the Great Depression as a disaster because of its length, depth, and consequences. The Depression lasted a decade, beginning in 1929 and ending during World War II. Industrial production plummeted.

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The Great Depression was a major turning point for the United States’s economy because it changed the relationship between the government and the economy. Before the Great Depression, the economy was a Laissez-faire style market where the government had no influence on private party transactions and businesses. After the Stock Market Crash of 1929, the people of the United States sought for reliefs from the government. The Government responded by creating tax reforms, benefiting the stock market, wheat prices, employment, and the number of bank suspensions, and providing comfort for the people. As a result of their disparity, the people put their trust in the government in hopes that they would repair the broken economy.

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What causes a recession is inflation. Inflation is a general increase in prices and the fall in the value of money. Falling confidence in the consumer can be a major cause in leading to a recession. Also, manufacturing orders starting to slow down in the economy, this can lead to less money being produced throughout the economy resulting to a loss of jobs. Since this causes a high unemployment rate many of the people will get on a government welfare program to pay for their family and that is even more money being lost in the economy, making the nation fall into a deeper recession.

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The financial crisis is believed to be a follow up from the Great Depression which happened on the 24th of October 1929. The financial crisis was worst economic tragedy since the Great depression in 1929. This disastrous event occurred due to the fact that Federal Reserve and the Treasury Department didn’t put in any effort to prevent a situation like this from occurring. The financial crisis did lead to the great recession that began in 2006 when the pricing of housing began to fall. In 2007 by August the Federal Reserve declared to the subprime mortgage crisis as the pricing of housing had dropped

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The Great Depression was caused by speculation and installment buying, income maldistribution, and overproduction because each of these factors combined made the economy worse before and after the stock market crash, which led to The Great Depression. Speculation and installment buying helped caused The Great Depression because people were buying so much stuff on credit, when

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Many families and businesses struggled to make ends meet. Many of the Fiscal and Monetary policies implemented received a lot of criticism due to the amount of money that had to be initially invested to help get the economy flowing again. From 2007 to 2009 the government implemented Economic Stimulus Act, the Emergency Economic Stabilization Act and the American Recovery and Reinvestment Act. The three fiscal policies were designed to help get the housing market up and running again, as well as help provide tax incentives to families and businesses. Also, some of these did help bail out some major banks and even car dealers.

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The Great Recession in 2008 was caused by a rise and fall in the housing market. This was the greatest economic downturn since the Great Depression and the United States faced a decline of 2.8% in gross domestic product and an unemployment rate of around 10%, whereas the Great Depression had a decline of over 10% in gross domestic product and an unemployment rate of 25% (The Investopedia Team.) The other, and more recent event, would be the minor recession caused by the COVID-19 pandemic in 2020. The lockdown caused by this disease left many U.S. citizens temporarily unemployed. The decline in gross domestic product was around 9%, which was more than the Great Recession.

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Sheree R. Curry article talks about 5 contributing factors in the housing market crash, low doc loans, Adjustable rate mortgages, equity line of credit, more money down needed and mortgage insurance. Low Doc Loans are loans that do not require much information and do not require borrowers to provide documentation of their income to lenders, Adjustable rate mortgages were made to adjust periodically to reflect market conditions, equity line of credit is a loan in which the lender agrees to lend a maximum amount of money and has to be paid by a certain time, you also need more money down “minimum has now increased to 10% down.” This quote shows increase in a down payment, mortgage insurance used to get replaced by people putting 20 percent down on a FHA-backed mortgage and avoid paying the

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Introduction The Great Depression was a worldwide economic recession, considered the worst downturn in the economy of the industrialized Western world. Both its duration, lasting from 1929 until 1939 or 1941, when the United States (US) got involved in World War II; and its severity meant the acquisition of fundamental changes in the economic and political spheres of the modern world (History.com Editors, 2009b). Even though this recession originated in the US, its consequences reached overseas shores. Not only was the American economy and society affected, but also many other countries, including European ones, experienced drastic declines in inputs coming from the US, a severe rise in unemployment, and acute deflation.

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The Great Recession was the rapid decline in economic activity during the late 2000s, and it was the largest downturn since the Great Depression. The term “Great Recession” is related to the U.S. recession, and lasted from December 2007 to June 2009. It began when the U.S. housing market went downhill and lost significant value. The Great Depression and The Great Recession have similar causes because of the economic, political, and social issues.

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