Real - World examples

Question 1

What happened in the 08/09 crisis in terms of availability of credit ?

Answer 1

IN 08/09 CRISIS a lot of people wanted to take out loans from the bank for houses (mortgage) prime mortgage crisis led to bad debts and huge losses for banks. Banks then refused to lend to each other which meant less funds available for lending to the public as credit was restricted consumers found it harder to obtain finance to supplement their spending which means that consumption fell.