Which of the following statements regarding the Great Recession (2007-2009) is correct?

• A. The unemployment rate remained stable throughout the Great Recession.
• B. The financial crisis had little impact on global financial markets.
• C. The Great Recession was caused by a sudden increase in government spending.
• D. The crisis was primarily triggered by the collapse of the housing bubble and widespread defaults on subprime mortgages.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the context of the Great Recession (2007-2009), which was a severe global economic downturn triggered by financial market disruptions.
2. Step 2: Analyze the unemployment rate during the Great Recession. Recognize that unemployment increased significantly rather than remaining stable, indicating economic distress.
3. Step 3: Consider the impact on global financial markets. The crisis caused widespread turmoil, contradicting the statement that it had little impact.
4. Step 4: Evaluate the causes of the Great Recession. It was not caused by a sudden increase in government spending, but rather by the collapse of the housing bubble and defaults on subprime mortgages.
5. Step 5: Conclude that the correct statement is that the crisis was primarily triggered by the collapse of the housing bubble and widespread defaults on subprime mortgages, which led to a financial crisis and economic recession.