Final answer:
The American economic crisis had a significant negative impact on the European economy. It led to recessions in Europe, decreased international trade, imposed austerity measures in several countries, and questioned the euro's viability. Trade policies like the Hawley-Smoot Tariff Act exacerbated international economic turbulence.
Step-by-step explanation:
The American economic crisis, particularly the Great Recession, had profound effects on the European economy. When the United States entered a recession, it led to a global downturn, causing European countries to also suffer recessions or experience slower economic growth. The crisis affected international trade, decelerating economic exchanges and exacerbating the impact on businesses worldwide. As a response, many European countries provided financial assistance or bailouts to their financial markets to maintain the necessary flow of capital.
European economies with already high deficits due to financial crisis bailouts had to adopt austerity measures, including significant government spending cuts and tax increases, leading to further financial strain within the region. Countries like Greece, Ireland, Spain, and Portugal were significantly impacted, triggering a debate over the long-term viability of the euro.
In addition, trade policies such as the Hawley-Smoot Tariff Act worsened the situation by stifling international trade, which was detrimental to European economies reliant on trade with the United States. Overall, the American economic crisis significantly affected Europe by reducing demand for European goods, leading to high unemployment rates, reducing access to credit, and increasing economic instability.