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Chapter 1: Q.5 (page 66)

What was the main cause of the recession that began in 2007?

Short Answer

Expert verified

The major reason for 2007 crisis was subprime mortgage crisis .

Step by step solution

01

Step 1. Introduction 

Recession is an economic situation where the economic activities declines, employment declines, expenditure of people declines etc.

02

Step 2. Explanation

The Great Recession, one of the worst recessions in US history, officially continued from December 2007 to June 2009. Low interest rates, easy credit, poor regulation, and the collapse of the housing market backed by toxic subprime mortgages were the main reasons. But everything boils down to relaxed regulations on banks.

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