Economic Events and Policies: Understanding the Great Recession and Inflation

These flashcards cover key economic concepts and historical events discussed in the lecture, focusing on tutoring services, the Great Recession, the Great Inflation, and the Great Depression.

What is ASTS and what services does it provide?

ASTS (Academic Success and Tutorial Services) offers a tutorial service that helps students with practice problems, topics they find difficult, and provides a safe space to ask questions.

What are the two main avenues for tutoring mentioned in the lecture?

ASTS tutoring services and the Economics drop-in tutoring center located at Tidings Hall.

What was the primary cause of the Great Recession of 2007-2009?

The Great Recession was primarily caused by a bubble in the housing market due to inflated house prices.

How did the Great Recession differ from the COVID recession in terms of duration and severity?

The Great Recession lasted longer and was more prolonged, while the COVID recession was sharper but shorter in duration.

What was the peak unemployment rate during the Great Recession and what was its trend afterward?

Unemployment peaked at about 10% and remained persistently high for several years before declining.

What regulatory failure contributed to the housing bubble prior to the Great Recession?

Banks relaxed their credit standards and began lending to individuals without verified income or solid credit histories, driven by speculative beliefs in continued rising house prices.

What was a major economic challenge faced by the Federal Reserve during the Great Recession?

The challenge was to implement effective monetary policy when banks were reluctant to lend money despite low interest rates.

Who was Paul Volcker and what role did he play during the great inflation of the 1970s?

Paul Volcker was the Federal Reserve chair who aggressively raised interest rates to combat high inflation in the early 1980s.

What was 'stagflation' and when did it occur in the U.S. economy?

Stagflation refers to the coexistence of high inflation and high unemployment, which was prevalent during the 1970s.

Describe one major consequence of the 1929 stock market crash?

The crash led to a significant decline in consumer spending, widespread bank failures, and a catastrophic economic downturn known as the Great Depression.

What was the primary cause of the Great Recession of 2007-2009?

The Great Recession was primarily caused by a bubble in the housing market due to inflated house prices.

How did the Great Recession differ from the COVID recession in terms of duration and severity?

The Great Recession lasted longer and was more prolonged, while the COVID recession was sharper but shorter in duration.

What was the peak unemployment rate during the Great Recession and what was its trend afterward?

Unemployment peaked at about 10% and remained persistently high for several years before declining.

What regulatory failure contributed to the housing bubble prior to the Great Recession?

Banks relaxed their credit standards and began lending to individuals without verified income or solid credit histories, driven by speculative beliefs in continued rising house prices.

What was a key characteristic of the credit standards adopted by banks prior to the Great Recession?

They were relaxed, leading to lending to individuals without verified income or solid credit histories.

What was a major economic challenge faced by the Federal Reserve during the Great Recession?

The challenge was to implement effective monetary policy when banks were reluctant to lend money despite low interest rates.

During the Great Recession, even with low interest rates, what primary reluctance from banks challenged the Federal Reserve's monetary policy?

Banks were reluctant to lend money.

Who was Paul Volcker and what role did he play during the great inflation of the 1970s?

Paul Volcker was the Federal Reserve chair who aggressively raised interest rates to combat high inflation in the early 1980s.

What specific action did Paul Volcker take with interest rates to combat high inflation?

He aggressively raised interest rates.

When did Paul Volcker serve as the Federal Reserve chair while aggressively raising interest rates to combat inflation?

In the early 1980s.

What was 'stagflation' and when did it occur in the U.S. economy?

Stagflation refers to the coexistence of high inflation and high unemployment, which was prevalent during the 1970s.

Describe one major consequence of the 1929 stock market crash?

The crash led to a significant decline in consumer spending, widespread bank failures, and a catastrophic economic downturn known as the Great Depression.

Analyze the chain of events that led from relaxed banking standards to the housing bubble and ultimately to the Great Recession of 2007-2009.

Banks relaxed credit standards, lending to individuals without solid credit or verified income due to speculative beliefs in rising house prices. This inflated house prices, creating a housing bubble. The eventual burst of this bubble led to widespread economic downturn, marking the start of the Great Recession.

Compare and contrast the characteristics of the Great Recession (2007-2009) and the COVID Recession in terms of their duration and severity, and discuss the unemployment trend during the Great Recession.

The Great Recession was longer and more prolonged, with unemployment peaking at about 10% and remaining persistently high for several years. The COVID recession, in contrast, was sharper but shorter in duration.

Discuss the economic phenomenon of 'stagflation' and explain how policy like Paul Volcker's addressed one of its key components.

Stagflation is the coexistence of high inflation and high unemployment, prevalent in the 1970s. Paul Volcker, as Federal Reserve chair, addressed the high inflation component by aggressively raising interest rates in the early 1980s.

What is ASTS and what services does it provide?

ASTS (Academic Success and Tutorial Services) offers a tutorial service that helps students with practice problems, topics they find difficult, and provides a safe space to ask questions.

What are the two main avenues for tutoring mentioned in the lecture?

ASTS tutoring services and the Economics drop-in tutoring center located at Tidings Hall.

What was the primary cause of the Great Recession of 2007-2009?

The Great Recession was primarily caused by a bubble in the housing market due to inflated house prices.

How did the Great Recession differ from the COVID recession in terms of duration and severity?

The Great Recession lasted longer and was more prolonged, while the COVID recession was sharper but shorter in duration.

What was the peak unemployment rate during the Great Recession and what was its trend afterward?

Unemployment peaked at about 10% and remained persistently high for several years before declining.

What regulatory failure contributed to the housing bubble prior to the Great Recession?

Banks relaxed their credit standards and began lending to individuals without verified income or solid credit histories, driven by speculative beliefs in continued rising house prices.

What was a major economic challenge faced by the Federal Reserve during the Great Recession?

The challenge was to implement effective monetary policy when banks were reluctant to lend money despite low interest rates.

Who was Paul Volcker and what role did he play during the great inflation of the 1970s?

Paul Volcker was the Federal Reserve chair who aggressively raised interest rates to combat high inflation in the early 1980s.

What was 'stagflation' and when did it occur in the U.S. economy?

Stagflation refers to the coexistence of high inflation and high unemployment, which was prevalent during the 1970s.

Describe one major consequence of the 1929 stock market crash?

The crash led to a significant decline in consumer spending, widespread bank failures, and a catastrophic economic downturn known as the Great Depression.

What was the primary cause of the Great Recession of 2007-2009?

The Great Recession was primarily caused by a bubble in the housing market due to inflated house prices.

How did the Great Recession differ from the COVID recession in terms of duration and severity?

The Great Recession lasted longer and was more prolonged, while the COVID recession was sharper but shorter in duration.

What was the peak unemployment rate during the Great Recession and what was its trend afterward?

Unemployment peaked at about 10% and remained persistently high for several years before declining.

What regulatory failure contributed to the housing bubble prior to the Great Recession?

Banks relaxed their credit standards and began lending to individuals without verified income or solid credit histories, driven by speculative beliefs in continued rising house prices.

What was a key characteristic of the credit standards adopted by banks prior to the Great Recession?

They were relaxed, leading to lending to individuals without verified income or solid credit histories.

What was a major economic challenge faced by the Federal Reserve during the Great Recession?

The challenge was to implement effective monetary policy when banks were reluctant to lend money despite low interest rates.

During the Great Recession, even with low interest rates, what primary reluctance from banks challenged the Federal Reserve's monetary policy?

Banks were reluctant to lend money.

Who was Paul Volcker and what role did he play during the great inflation of the 1970s?

Paul Volcker was the Federal Reserve chair who aggressively raised interest rates to combat high inflation in the early 1980s.

What specific action did Paul Volcker take with interest rates to combat high inflation?

He aggressively raised interest rates.

When did Paul Volcker serve as the Federal Reserve chair while aggressively raising interest rates to combat inflation?

In the early 1980s.

What was 'stagflation' and when did it occur in the U.S. economy?

Stagflation refers to the coexistence of high inflation and high unemployment, which was prevalent during the 1970s.

Describe one major consequence of the 1929 stock market crash?

The crash led to a significant decline in consumer spending, widespread bank failures, and a catastrophic economic downturn known as the Great Depression.

Analyze the chain of events that led from relaxed banking standards to the housing bubble and ultimately to the Great Recession of 2007-2009.

Banks relaxed credit standards, lending to individuals without solid credit or verified income due to speculative beliefs in rising house prices. This inflated house prices, creating a housing bubble. The eventual burst of this bubble led to widespread economic downturn, marking the start of the Great Recession.

Compare and contrast the characteristics of the Great Recession (2007-2009) and the COVID Recession in terms of their duration and severity, and discuss the unemployment trend during the Great Recession.

The Great Recession was longer and more prolonged, with unemployment peaking at about 10% and remaining persistently high for several years. The COVID recession, in contrast, was sharper but shorter in duration.

Discuss the economic phenomenon of 'stagflation' and explain how policy like Paul Volcker's addressed one of its key components.

Stagflation is the coexistence of high inflation and high unemployment, prevalent in the 1970s. Paul Volcker, as Federal Reserve chair, addressed the high inflation component by aggressively raising interest rates in the early 1980s.

What was the timeframe of the Great Recession (2007-2009), and what ultimately triggered this economic crisis?

The Great Recession occurred from 2007 to 2009 and was triggered by the burst of a housing market bubble, fueled by inflated house prices.

What was the approximate peak unemployment rate during the Great Recession, and what was the subsequent trend of unemployment?

The unemployment rate peaked at about 10\% and remained persistently high for several years before declining.

Detail the specific regulatory failures and banking practices that contributed to the housing bubble preceding the Great Recession.

Banks relaxed credit standards, lending to individuals without verified income or solid credit histories, driven by speculative beliefs in continued rising house prices.

Analyze a significant challenge faced by the Federal Reserve in implementing monetary policy during the Great Recession.

The Federal Reserve's major challenge was that banks were reluctant to lend money despite low interest rates, hindering the effectiveness of monetary policy.

Compare the duration and severity of the COVID Recession to that of the Great Recession of 2007-2009.

The COVID Recession was generally sharper but shorter in duration compared to the Great Recession, which was longer and more prolonged.

Define 'stagflation' and identify the period when it was notably prevalent in the U.S. economy.

Stagflation refers to the coexistence of high inflation and high unemployment, and it was notably prevalent during the 1970s.

Who was Paul Volcker, and what specific action did he take in the early 1980s to combat the high inflation component of stagflation?

Paul Volcker was the Federal Reserve chair who aggressively raised interest rates in the early 1980s to combat the high inflation experienced during the 1970s.

When did the pivotal 1929 stock market crash occur?

The 1929 stock market crash occurred in that year.

What were the major economic consequences that immediately followed the 1929 stock market crash, leading to the Great Depression?

The crash led to a significant decline in consumer spending, widespread bank failures, and a catastrophic economic downturn known as the Great Depression.