Question

Saving, Investment, and the Financial AL FRED I System- Ask FRED Let's take a look at financial intermediation and the financial crisis and recession of 2007-2009. The accompanying graph illustrates the series All Sectors; Total Loans; Liability. This6 series reflects all the lending in the U.S economy from banks and all other financial intermediaries. The series increases quite smoothly, rising almost without exception every single year from 1945 to 2008. In the third quarter of 2008 the series begins to drop tremendously, and in an unprecedented way-this is the financial crisis 28,000,000 24,000,000 20,000,000 O 16,000,000 6 12,000,000 8,000,000 4,000,000 0 1950 1960 1970 1980 1990 2000 2010 950 Source: Board of Governors of the Federal Reserve System (US) c. In the space of just three years approximately how much lending disappeared from the U.S. economy? million

Answer 1

Introduction

The case study above, highlights the great recession which happened across the globe and was fueled by the loan and housing crisis of the United States.

It resulted in more stringent norms for the general public and resulted in greater damage to the world economy than any other years.

In the case, the decline in lending is primarily because of bad debts of the banks causing them to be more stringent towards the loans which they granted, and also highlight the cash crunch that happened as a result of the same.

C) In the space of just three years approximately how much lending disappeared from the US Economy

If we see the downward trend of the graph from 2007-2009, the lending declined from 24,000,000 to about 22,000,000 million USD.

This is a reduction of 2,000,000 Million USD

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