Question

What were three things that helped cause the 2000s recessions?

Answer 1

Answer:

The correct answers are B, C and E. Three things that helped cause the 2000s recessions were the federal deficit, the mortgage crisis, and spiking gas prices.

Explanation:

The years leading up to the crisis were characterized by sharp increases in commodities (especially gas), stock and housing prices and a related boom in demand. Problems in the US banking system and the emergence of highly transparent securities with security in housing led to increasing problems in the financial sector as housing prices in the US fell sharply in 2006. The crisis gradually spread in the financial sector and increased dramatically as the US fourth largest investment bank Lehman Brothers was declared bankrupt on September 15, 2008. The bankruptcy caused international panic, and the interbank mortgage market froze to ice. A number of large and well-established investment banks and commercial banks in the US and Europe suffered heavy losses. Several went bankrupt and others were saved only as a result of considerable financial assistance from their respective governments.

The crisis then spread rapidly from the financial sector to the real economy. There was a sharp decline in international trade, rising unemployment, public debt and falling commodity prices. The situation is often perceived as the greatest decline in the world economy since the depression of the 1930s.

Governments and central banks around the world reacted with expansive fiscal and monetary policies to stimulate domestic economies. At the same time, initiatives were taken to reduce the risk in the financial systems.