Here's What Caused the Great Recession | History

The Great Recession of 2007 through 2009 was the worst economic crisis in America since the 

• Great Depression.

• Recession of 1945.

The biggest cause of the recession was the subprime mortgage crisis.

• True

• False

Subprime mortgages are loans to people with more than enough money to buy a home.

• True

• False

Why did so many lenders (banks) and borrowers (home buyers) take on these risking subprime mortgages?

• Neither had anything to lose.

• Borrowers were not told the risk.

• Both could make a lot of money if the home increased in value.

Owning one's own home has always been central to the American Dream.

• True

• False

The housing market bubble burst in 2007 and housing prices dropped rapidly because

• demand increased.

• demand decreased.

With home values plummeting, borrowers owed more on the home than what it was purchased for and therefore could not repay the banks.  So many homes were foreclosed on (seized by the banks) that eventually banks 

• gave homes away to the poor.

• failed and declared bankruptcy.

In 2008 with so many banks in financial failure, the US government stepped in a bailed these banks out so they could survive and begin lending money to businesses and individuals.  This action greatly contributed to the 

• rise in wages.

• national debt.

The US government going further in debt in order to provide a combination of bank bailouts, financial assistance to the auto industry, and job programs only worsened the recession.

• True

• False