Great Recession

Definition

The Great Recession was a severe economic downturn that occurred in the late 2000s, characterized by a significant decline in economic activity, high unemployment, and widespread financial distress. This term is particularly relevant in the context of the topics '32.2 The Domestic Mission' and '32.4 Hope and Change', as the Great Recession had a profound impact on the domestic policies and the political landscape of the United States during this period.

5 Must Know Facts For Your Next Test

1. The Great Recession began in December 2007 and lasted until June 2009, making it the longest and most severe economic downturn since the Great Depression of the 1930s.
2. The housing bubble and the subprime mortgage crisis were the primary triggers of the Great Recession, as the collapse of the housing market led to a broader financial crisis.
3. The Great Recession resulted in the loss of millions of jobs, a sharp decline in consumer spending, and a significant drop in the stock market and housing prices.
4. The government's response to the Great Recession included the implementation of fiscal policies, such as the American Recovery and Reinvestment Act, as well as the use of monetary policy tools by the Federal Reserve.
5. The Great Recession had a significant impact on the domestic policies and political landscape of the United States, as it influenced the agenda and priorities of the Obama administration and the Democratic Party during the 32.4 Hope and Change period.

Review Questions

• Explain how the Great Recession was connected to the domestic mission of the government during this period.
  • The Great Recession had a profound impact on the domestic mission of the government during this period. The severe economic downturn led to a significant increase in unemployment, a decline in consumer spending, and a financial crisis that threatened the stability of the banking and housing sectors. In response, the government implemented a range of fiscal and monetary policies, such as the American Recovery and Reinvestment Act and the Federal Reserve's quantitative easing programs, to stimulate the economy, provide support to struggling households and businesses, and restore financial stability. These domestic policies were a critical part of the government's efforts to address the immediate challenges posed by the Great Recession and lay the groundwork for a broader economic recovery.
• Describe how the Great Recession influenced the 'Hope and Change' agenda of the Obama administration.
  • The Great Recession had a significant impact on the 'Hope and Change' agenda of the Obama administration. The severe economic downturn and its aftermath, including high unemployment, foreclosures, and financial instability, became a central focus of the administration's domestic policy priorities. The Obama administration's response to the crisis, which included the implementation of the American Recovery and Reinvestment Act, financial sector reforms, and efforts to address the housing crisis, was a key part of its 'Hope and Change' platform. The administration's ability to navigate the economic challenges posed by the Great Recession and promote a broader economic recovery was seen as a crucial test of its ability to deliver on its promises of change and to restore hope in the American people.
• Analyze how the government's response to the Great Recession, including both fiscal and monetary policies, shaped the political landscape and the balance of power between the executive and legislative branches during this period.
  • The government's response to the Great Recession, which involved the use of both fiscal and monetary policies, had a significant impact on the political landscape and the balance of power between the executive and legislative branches during this period. The implementation of large-scale stimulus and recovery programs, such as the American Recovery and Reinvestment Act, required close coordination between the executive branch and Congress, leading to increased tensions and political battles over the appropriate scope and nature of the government's intervention in the economy. Additionally, the Federal Reserve's use of unconventional monetary policy tools, such as quantitative easing, sparked debates over the appropriate role of the central bank and its independence from political influence. These dynamics contributed to a highly polarized political environment, with the Republican Party often opposing the administration's economic policies and seeking to limit the government's role in the economy. The outcome of these political battles ultimately shaped the balance of power between the executive and legislative branches, as well as the broader political landscape during the 'Hope and Change' period.

Related terms

Subprime Mortgage Crisis: The subprime mortgage crisis was a major contributing factor to the Great Recession, as the collapse of the subprime mortgage market led to a broader financial crisis and economic downturn.

Fiscal Policy: Fiscal policy refers to the government's use of taxation and spending to influence the economy, which played a crucial role in the government's response to the Great Recession.

Monetary Policy: Monetary policy, which involves the manipulation of interest rates and the money supply by the Federal Reserve, was also a key tool used to address the economic challenges posed by the Great Recession.