Answer the following three exam questions as best &much as possible.References should be from books,...

Question

Answer the following three exam questions as best &much as possible.References should be from books, academic resources, etc.Part 2. The Great Recession5. Explain what caused the Financial Crisis of XXXXXXXXXX. [10 marks]6. Explain how in the economy could be self-regulating in the long-run and should recover from the Great Recession. [20 marks]8. However, in Europe the Great Recession seems to continue because of excessive government debt and the European Central Bank’s reluctance to buy government bonds. Explain. [20 marks]
	
Document Preview: Answer the following three exam questions as best &much as possible.References should be from books, academic resources, etc. Part 2. The Great Recession5. Explain what caused the Financial Crisis of XXXXXXXXXX. [10 marks]6. Explain how in the economy could be self-regulating in the long-run and should recover from the Great Recession. [20 marks]8. However, in Europe the Great Recession seems to continue because of excessive government debt and the European Central Bank’s reluctance to buy government bonds. Explain. [20 marks]

David · Accepted Answer

Answer 1) In July 2007 started a financial crisis which lasted 2009, 
When a loss of confidence by potential investors in the value of 
securitized mortgages  in the United States resulted in liquidity crisis 
that prompted a large injection of capital into financial markets by the 
United States Federal Reserve, Bank of England and the European 
Central Bank. This crisis in real estate, banking and credit in the United 
States had a global reach and affected a wide range of financial and 
economic activities and institutions. Dean Baker, an analyst wrote that 
from 1953 to 1995 house prices are aligning with inflation in the 
economy, but when house prices from 1995 onwards were adjusted for 
rise in overall price level they showed a marked increase over and 
above inflation based - rapid price increase. In August 2002 Dean Baker 
identified that a bubble in the US housing market existed and he 
predicted an ensuing crisis. Baker's argument was confirmed with the 
construction of a data series from 1895 to 1995 by the influential Yale 
economist Robert Shiller, which showed that real house prices had 
been essentially unchanged over those 100 years. An asset bubble is 
the phenomenon of an upward price movement over an extended 
period of time that then crashes swiftly. However, the asset boom and 
busts do not explain the main cause of the financial crisis. Sub-prime 
mortgages were the first place where the collapse of the bubble 
affecting the housing market showed up. After asset prices decline 
significantly,

Answer the following three exam questions as best &much as possible. References should be from books, academic resources, etc. Part 2. The Great Recession 5. Explain what caused the Financial Crisis...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment