ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The economic crisis started in the U.S. but spread to the rest of the world.

Detailed explanation-2: -The 2007–2008 financial crisis developed gradually. Home prices began to fall in early 2006. In early 2007, subprime lenders began to file for bankruptcy. In June 2007, two big hedge funds failed, weighed down by investments in subprime loans.

Detailed explanation-3: -The Bottom Line Deregulation in the financial industry was the primary cause of the 2008 financial crash. It allowed speculation on derivatives backed by cheap, wantonly-issued mortgages, available to even those with questionable creditworthiness.

Detailed explanation-4: -Final answer The economic crisis began in the USA when the Wallstreet exchange crashed in 1929, the USA could not return the loans and the period was followed by unemployment, bankruptcy and exports fell.

Detailed explanation-5: -Economists cite as the main culprit the collapse of the subprime mortgage market-defaults on high-risk housing loans-which led to a credit crunch in the global banking system and a precipitous drop in bank lending.