Final answer:
The end of 2007 saw the beginning of the Great Recession, culminating in a global economic downturn. Key measures to counteract the crisis included government bailouts and fiscal policies. The U.S. government's American Recovery and Reinvestment Act of 2009, and other interventions were instrumental in supporting the global economy during this period.
Step-by-step explanation:
At the end of 2007, the global economy was confronted with the onset of what would later be known as the Great Recession. The collapse of housing bubbles in regions such as California and Florida, along with a drastic fall in housing prices and a downturn in the construction industry, marked the beginning of economic distress. The crisis was exacerbated by the failure of major banks in the United States and Europe—a situation that led to bankruptcies, government bailouts, and a tightening of lending policies.
In response to the escalating financial crisis, the U.S. government enacted several key measures to keep the economy afloat. One significant action was the authorization of 700 billion dollars in bailout money, which was part of a broader effort that included committing trillions of dollars to support the financial system. However, the provisional remedies could not immediately reverse the downturn as banks were still hesitant to lend, despite the federal infusions of cash.
During this period, the stock market suffered a 40% plunge, eradicating tens of trillions of dollars in wealth, and housing prices fell 20% nationwide, leading to further loss of wealth. Economic policy makers were presented with the challenge of halting the spread of the recession beyond the financial and housing sectors. Ultimately, the Obama administration signed the American Recovery and Reinvestment Act of 2009, a bill that provided 787 billion dollars in stimulus through a combination of spending and tax cuts, in an attempt to jumpstart the shrinking economy.
The Great Recession officially ended in June 2009, and in hindsight, it was understood to have struck the U.S. economy in a two-pronged attack involving both the housing market crash and a broader failure of financial credit institutions. Eventually, economic policymakers resorted to implementing various monetary and fiscal policies to support the economy. These strategies aimed to shore up the housing market, stabilize domestic industries, and maintain the solidity of the financial sector amidst a climate of decreased consumer spending, slowed international trade, and widespread job losses.