Financial Crisis in US

Running Head: FINANCIAL CRISIS 0
Financial Crisis in US
Student’s details:

FINANCIAL CRISIS 1
Contents
INRODUCTION............................................................................................................. 2
Definition of Recession............................................................................................... 2
Great Recession of 2007............................................................................................ 2
Causes of the Recession............................................................................................. 3
Subprime Mortgage....................................................................................................... 4
Reduction in Rate of Interests.......................................................................................... 4
Failure of Corporate Governance...................................................................................... 4
Macro-economic Consequences of Recession..........................................................................5
International trade......................................................................................................... 5
US as Hegemony.......................................................................................................... 5
Decisions made by US government (Post- Recession)................................................................6

FINANCIAL CRISIS 2
INRODUCTION
The following report gives information about the “great recession” faced by US in the
year 2007 and it lasted till the year 2009. It is regarded as one of the most severe economic crisis
faced after the great depression of 1930’s. The report further explains the causes behind the
financial crisis which brought the US economy to such a shattering stage (History, 2017).
There were various measures taken by the US government to cure the situation some of them are
discussed below. The report also highlights macro- economic factors which led to the financial
crisis and depicts the actual situation faced by US while it was going through the crisis ( Arestis
& Karakitsos, 2010).
Definition of Recession
Recession can be referred to the decline in economic growth rate of a company but since
US has faced the economic recession of 2007 the international monetary fund has changed the
parameters for recession (Dinatale, 2009).
As per IMF “Global Recession” can be referred to an economic situation where the gross
domestic product falls accompanied by fall in employment ratio , investments, trade , industrial
production, oil consumption etc. These are some of the macroeconomic indicators which help in
determining whether an economy is facing financial crisis or not ( Tozzo, 2018).
Great Recession of 2007
United States of America which is presently the leading economy of the world once faced
severe economic crisis. The year of 2007 turned out to be the darkest year for US economy. In
the following year the US economy broke out on an extreme level almost every sector of US