Final answer:
There are four main reasons why a nation may face serious economic difficulties: decreased trade and commerce, decline in savings, changes in government regulations, and uncertainty.
Step-by-step explanation:
There are several reasons why a nation may be facing serious economic difficulties:
- Decreased trade and commerce: When trade and commerce decline to dangerously low levels, it can have a negative impact on the economy. This can lead to reduced economic growth and job opportunities.
- Decline in savings: When the overall level of saving in the economy diminishes, it can put a strain on the economy. This can limit the availability of capital for investment and hinder economic development.
- Changes in government regulations: If the federal government changes bank regulations in a way that makes it cheaper and easier for banks to make home loans, it can lead to financial instability. This can increase the risk of a housing market crash and negatively impact the economy.
- Uncertainty: Threats of war or other factors that create economic uncertainty can impact consumer and investor confidence. This can lead to decreased spending, lower investment, and a slowdown in economic activity.