Macro3_LecturePPT_Ch10.ppt - Chapter 10 The Great Recession...

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Chapter 10 The Great Recession: A First Look By Charles I. Jones Media Slides Created By Dave Brown Penn State University
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10.1 Introduction In this chapter, we learn: The causes of the financial crisis that began in the summer of 2007 and where the economy currently stands. How the current financial crisis compares to previous recessions and to previous financial crises in the United States and around the world.
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The financial crisis that started in the summer of 2007 and intensified in September 2008 marked the end of an era for U.S. investment banking. Several important concepts in finance, including balance sheet and leverage . The National Bureau of Economic Research determined that a recession began in December 2007 and was the worst recession since the Great Depression of the 1930s.
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10.2 Recent Shocks to the Macroeconomy What shocks to the macroeconomy have caused the global financial crisis? Housing prices Global saving glut 全球储蓄过剩 Subprime lending 次级贷款 and rise in interest rates Previous financial turmoil 金融危机 Oil prices
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Housing Prices Housing prices tripled between 1996 and 2006. “Housing bubble” Between mid-2006 and the first quarter of 2012, the national index for housing prices plummeted by 42 percent. The bubble “burst”
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The Global Saving Glut The current financial turmoil was caused partly by prior financial crises 金融危机 . Ben Bernanke March 2005: “global saving glut” Glut = “excess” The United States had an excess of savings with desire to invest. Higher investment demand contributed to rising asset prices in the housing market.
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Subprime Lending and the Rise in Interest Rates The savings glut led to low interest rates, and many borrowers took out mortgages 抵押贷款 to buy homes between 2000 and 2006.
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