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Great Recession Essay

839 Words4 Pages

Considered the largest economic decline since the Great Depression; the Great Recession changed the lives of many Americans. The recession began as the US housing market went from boom to bust as mortgaged-backed securities and derivatives lost significant value. Down more than 90% the stock market wasn’t all that was impacted by the recession. One of the consequences of recession is the impacts it can have on people. “Grim as it is, recession lead to higher rates of child malnutrition, and there is ample evidence that point to serious long-term consequences to such malnutrition, including stunted development and academic under-achievement” (Forbes). Including higher chances of increased taxes, inflation, and other unpleasant consequences …show more content…

Resulting in unemployment sitting around 10% in some states. The Feds now were faced with the difficult challenge of simulating the economy, controlling inflation, and increasing employment while at the same time retaining the value of a dollar. The Feds combated this with open-market operation which lowered short-term interest rates. This was done in hopes of encouraging more borrowing for spending and investments. Although this required close watch and monitoring as lower interest rates influence the value of a dollar in foreign exchange. When the Fed’s issued out monetary policy that lowered interest rates they unfortunately lowered to value of the dollar. This resulted in, “not only lowered prices of US produced goods that are sold overseas, but it also raised the prices that US consumers need to pay for foreign produced goods” (). Unfortunately, US consumers may have to pay more for good imported from overseas. On the flipside, goods which were made here and exported saw a higher demand as the US dollar had a lower exchange value. Foreign consumers were more likely to buy products made in the USA because they were less expensive. A decrease in overseas imports coupled with increased demand for US exports definitely did justice in terms of increase GDP. “More foreign demand for US goods leads to a rise in domestic production, higher employment, and more capital expenditure which in turn, results in more business investments and greater productivity”

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