Question

Is it okay to talk about the financial crisis that hit the US in 2008 When asked about the economic crisis?

Answer 1

Yes, finacial crisis that took place in US 2008 resulted in deep recession in the US Economy. There is no much difference between financial crisis and economic crisis. The housing bubble that went burst in 2007-08, with excessive leverage in derivative positioning and loose regulation, all resulted in formation of the economic crisis in the US. The corporates went bankrupt due to excessive positioning in the Mortgage backed securities, due to more and more homeowners filling for insolvecny and bankruptcy. Most are bailed out by federal government as these entities were "TOO BIG TO FAIL", rest were allowed to be aquired by other banks.

This crisis resulted in negative economic growth rate. The US Economy went into deep recession, unemployment reached at all time high upto 10%, housing prices went down reducing wealth effect, inflation went negative, and there was situation of liquidity trap and saving glut due to loss of confidence in economy by economic agents. Housing bubble burst added negative multiplier effect in the economy.

I hope it answers your Question.