Great Recession

Definition

The Great Recession was a severe global economic downturn that occurred from late 2007 through mid-2009, primarily triggered by the collapse of the housing market in the United States. It led to widespread financial instability, high unemployment rates, and significant declines in consumer wealth.

5 Must Know Facts For Your Next Test

1. Triggered by the subprime mortgage crisis, leading to massive defaults and foreclosures.
2. Major financial institutions faced bankruptcy or required government bailouts to stay afloat.
3. The Federal Reserve responded with aggressive monetary policies, including lowering interest rates and quantitative easing.
4. It resulted in severe contractions in GDP and marked one of the most significant recessions since the Great Depression.
5. Bonds, particularly U.S. Treasury bonds, were seen as safe havens and performed relatively well during this period.

Review Questions

• What were the primary triggers of the Great Recession?
• How did major financial institutions respond to the economic downturn during the Great Recession?
• What role did U.S. Treasury bonds play during the Great Recession?

Related terms

Subprime Mortgage Crisis: A financial crisis arising from a dramatic increase in mortgage delinquencies and foreclosures due to high-risk lending practices.

Quantitative Easing:

A monetary policy wherein central banks purchase securities to increase money supply and encourage lending and investment.

GDP Contraction: A decline in a country's gross domestic product, indicating reduced economic activity and growth.