Final answer:
The 2007 recession was caused by the housing bubble burst, risky financial practices, and failing institutions, leading to global economic decline. Government responses included fiscal stimulus and monetary easing to mitigate the effects. The recession caused job and savings losses, and long-term recovery has been mixed, underscoring the need for strong financial regulation.
Step-by-step explanation:
The recession of 2007, also known as the Great Recession, was a period of global economic decline that had far-reaching consequences. Several factors contributed to the onset of the recession, including the collapse of the housing bubble in the United States, the financial crisis stemming from the accumulation of high-risk mortgage-backed securities, and the failure of prominent financial institutions. These causes led to a significant downturn in consumer confidence, a decrease in investment, and widespread unemployment.
Government action to alleviate the recession often involves fiscal stimulus, such as increased government spending and tax cuts, to boost economic growth. Additionally, monetary policy, like lowering interest rates and quantitative easing, can help by making borrowing more affordable and stimulating spending. During the 2007 recession, such actions were implemented to varying degrees by different governments to stabilize the economy and promote recovery.
The immediate effects of the recession included the loss of jobs, homes, and savings for millions of people, as well as a slowdown in economic growth worldwide. The long-term effects have been a topic of discussion, with some economies experiencing prolonged periods of recovery and others dealing with systemic changes that have affected economic policies and regulations.
Overall, the recession of 2007 highlighted the interconnectedness of global financial systems and the importance of robust economic and regulatory frameworks to prevent similar crises in the future.