Chapter 33
Economic Crises
Book
Version 3
By Boundless
By Boundless
Boundless Economics
Economics
by Boundless
Section 1
Fundamentals of Banking Crises
Causes of Banking Crises
Banking crises can be caused by inadequate governmental oversight, bank runs, positive feedback loops in the market and contagion.
Consequences of Banking Crises
Banking crises have a range of short-term and long-term repercussions, domestically and globally, that reduce economic output and growth.
Section 2
The 2007-2009 Crisis
Causes and Immediate Impacts of the Crisis
Banks, consumers, and the government all contributed to improper borrowing and lending, which in turn created a downward spiraling economy.
Recovery
The objective of economic recovery when in crisis is to stabilize the economy and recapture the value lost using economic stimulus strategies.
Global Impacts
The 2007-2009 economic collapse was damaging not only to the U.S. but also global markets, driving the global economy into recession.
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