Final answer:
The 2008 economic downturn was caused by housing market collapses and bank failures. President Barack Obama attempted to resolve the issue through stimulus spending, tax cuts, and measures to encourage credit and investment.
Step-by-step explanation:
The 2008 economic downturn was caused by a combination of factors, including the collapse of housing bubbles in California and Florida, the collapse of housing prices and the construction industry, and the collapse of major banks in the United States and Europe. These events led to a decrease in consumer spending, a slowdown in international trade, and a rise in unemployment.
- President Barack Obama attempted to resolve the issue by signing the American Recovery and Reinvestment Act of 2009. This bill provided $787 billion in stimulus through a combination of spending and tax cuts.
- Additionally, the Federal Reserve actively lowered short-term interest rates and implemented measures to pump money into the economy to encourage credit and investment.
- These actions helped lessen the impact of the economic downturn and prevent a second Great Depression.