2007-08 Recession

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Causes of 2007-08 recession
The major causes of the great recession of 2007-8 were caused by the first subprime mortgages. The Federal Reserve’s failure to curb the unnecessary loans, taking too much risk, financial firms acting recklessly, explosive mix of borrowing, missing a full comprehension of the financial system and fissures in accountability formed the backbone of 2007-8 recessions. Moreover, during 2007-8, many financial institutions lower credit standards to accommodate the large demand for loans securities with an ill intention to create huge profits to share which greatly became a source for the economic recession during the 2007-8 err. The international trade imbalances and lax lending contributed to the high levels leading to recession. Consequently, the recession was caused by the significant increase in savings that were supposed to be
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This move led to $700 billion bailout and bankruptcies resulting to declining of employment and finally causing the economic recession.

Consequences of 2007-8 recessions
The recession of 2007-8 resulted in the great number of unemployment as illustrated previous by the DKs curve that suggested an increase in unemployment leads to decreased inflation (Arnold, 2010). Many people become jobless as the banks and other financial institutions started focusing over injecting money into the economy. This problem was to be corrected by reducing government expenditure. By doing so many people lost jobs and employment was greatly reduced.
Decline in the housing market
The recession greatly affected the housing investments as housing slump was set off. The investors were unable to flip their homes for a quick profit. Also, the adjustable rates of mortgages were increasing making it hard to get a mortgage.
Collapse of financial
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