Understanding cause and effect involves considering why an event occurred A caus
ID: 1210927 • Letter: U
Question
Understanding cause and effect involves considering why an event occurred A cause is the action or situation that produces an event or outcome What happens as a result of a cause h an effect. Directions Read the following passage and took tor logical relationships between events. Then compute the table by listing five effects mentioned in the excerpt, and identifying the cause of each. While we often refer to the Great Depression of 2008-2009, it actuary started in a little before 2008 (December 2007) and lasted until June of 2009. The Great Recession began because of the subprime housing crisis. Homebuyers had been allowed to buy homes at adjustable rate mortgages, whose initial tow interest rates encouraged buyers to take on more expensive mortgages. As interest rates rose, many homeowners were no longer able to pay their mortgages, and foreclosures increased. Rising foreclosures threatened the financial stability of the institutions who held the mortgages. As a result, many financial institutions came close to bankruptcy, and stock prices in these institutions fell. Credit dried up and business stowed. The impact on workers was perhaps the most devastating of all, with the percentage of working people who were unemployed more than doubling between October 2007 and October 2009. By a different measure, more than 8,220,000 people lost their jobs over the same two-year period. Finally, while the economy added a few thousand jobs every month after the recovery began, it took almost six and a half years before the total number of people employed m December 2007 was reached. The devastation of the recession extends well beyond the percentage of people unemployed or the number of people working. Many people who lost their jobs after October 2007 also lost their houses and their cars when they couldn't make their monthly payments. Others were forced to use their retirement savings or went even further into debt just to cover everyday living expenses.Explanation / Answer
6. CAUSE : UNEMPLOYMENT CREATED DEFAULT IN PAYMENT OF MONTHLY INSTALLMENTS.
EFFECT: PEOPLE WERE FORCED TO MAKE USE OF THEIR RETIREMENT SAVINGS.
CAUSE EFFECT 1. SUB PRIME HOUSING CRISIS GREAT RECESSION STARTED 2. PEOPLE BORROWED MORE MORTGAGES TO PAY FOR PREVIOUS MORTGAGES RATES OF INTEREST INCREASED. 3. INTEREST RATES BECAME VERY HIGH. PEOPLE DEFAULTED IN PAYMENT OF MORTGAGES. 4. DEFAULT IN MORTGAGE PAYMENT INCREASED FORECLOSURE. FINANCIAL STABILITY WAS AFFECTED BRINGING FINANCIAL INSTITUTIONS CLOSE TO BANKRUPTCY. 5. RECESSION CREATED SLOWNESS IN THE BUSINESS WORLD. IT RESULTED IN LARGE SCALE UNEMPLOYMENT IN THE ECONOMY.Related Questions
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