The great recession and the great depression both had major...

The Great Recession and the Great Depression both had major macroeconomic impacts. Sort the following impacts according to the economic contraction in which they occurred. 1. Unemployment stayed above 15% for most of a decade. 2. Annual GDP fell by 3.4% during the worst part of this contraction. 3. Unemployment hit a peak of 10%. 4. It took 4 years for GDP to return to the pre-contraction level. 5. Annual GDP fell by 26.7% during the worst part of this contraction. 6. Unemployment hit a peak of 25.6%. 7. It took 7 years for GDP to return to the pre-contraction level. 8. Unemployment stayed above 8% for nearly 5 years. Great Recession / Great Depression

Transcript

00:01 So we need to look at differences between the great recession and the great depression.

00:06 Great recession and great depression.

00:12 And for both of these, we are looking at the effects in the us.

00:18 Okay, so first of all, when did they happen? the great recession is the 2008 crash.

00:26 There are many causes, but one of the major ones of the us was the subprime mortgage crisis.

00:35 Basically, imagine you have a...

00:38 A mortgage that you're considering giving out, you're a bank, and you think they're not going to pay it back.

00:44 So you rate it as a very bad bet.

00:46 You don't want to do that.

00:47 But if you gather together a lot of these bad bets in one clump, it's not as bad a bet.

00:54 Sure, if some other might not pay back, but maybe most of them will.

00:58 And then you take this slightly better bet, this little clump, and you clump some of these together, and that's an even better bet.

01:06 And so on and so on until you have a pretty good bet.

01:09 Except the foundations are awful.

01:10 The foundation is a lot of people who do not pay their mortgage because they were a bad bet to begin with.

01:16 And so, subprime mortgage crisis.

01:19 The great depression is in the 1930s.

01:24 And there, well, there's a lot of causes again.

01:28 There's a huge sub -market crash.

01:30 There's banking failures.

01:33 There are multiple issues there.

01:36 Again, there was some defaulting.

01:37 Farmers defaulted on their low.

01:38 Loans, but everything had been kind of going up at a steady rate of about 6 % per year since the late 1800s of the us, and then a downturn was felt very, very heavily...

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