A General Slowdown In Economic Activity, A Downturn In

A general slowdown in economic activity, a downturn in the business cycle, a reduction in the amount of goods and services produced and sold. All of these listed here, are characteristics of a recession. A recession has a domino effect, where increased unemployment leads to less growth and a drop in consumer spending, directly affecting businesses, which lay off workers due to losses. A recession occurs when there are continuous (two or more) quarters of negative gross domestic product growth (GDP). In plain english this means, that economic growth slows down during a recession. Data showing an economy experiencing a period of recession include a fall in revenues of corporations, a fall in sales, a fall in stock prices, falling incomes†¦show more content†¦Housing had much to do with the macroeconomic strengths that cause The Great Recession. A big chunk of the borrowing during the consumer age was mortgage debt. The expanded availability of mortgage loans and low interest rates made home ownership more attractive. â€Å"Subprime† mortgages which granted credit to borrowerers with weak financial records, is said to be a definite cause of The Great recession. This caused an increase in demand which drove home prices upward, leading Americans to borrow more and more money. Many loans were bundled up and sold together as mortgage-backed securities, which were brought by large investment banks. This whirlwind of borrowers and lenders feeding each others desires created a financial bubble, but in 2006 the bubble had burst. After a rise in short-term interest rates induced by inflationworries at the Federal Reserve, it became more difficult for borrowers to refinance. Refinancing was needed to keep the bubble, and associated consumer demand going. The rising cost of refinancing, or the inability to refinance forced over extended borrowers to sell their homes. The rise in homes for sale stalled the rise on housing prices. Over-extended homeowners defaulted on mortgages, investors started to question mortgage backed securities so they plummeted reducing the availability of mortgage loans. Housing prices fell to the floor, as more people were forced to sell their home. The housing bubble affected way more Americans thanShow MoreRelatedBuilding Societies : An Integral Part Of Uk Financial Services1280 Words   |  6 Pagesrepresents all of the UK’s 52 building societies. A building society is a mutual organisation, which means it is collectively owned by its members. This means that members have the right to receive information, speak at meetings and vote at an annual general meeting (AGM) – in other words, they have a say in how the society operates. Every member has one vote. Each building society has a board of directors, who run the society on behalf of the members. 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