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Global Financial Crisis

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Global Financial Crisis TABLE OF CONTENTS ESSAY- GLOBAL FINANCIAL CRISIS 1 Great depression 1929 1 Sub-prime mortgage crisis 2 Global financial crisis3 Causes of Financial crisis3 Impacts of GFC over various economies and reforms were made after global financial crisis 5 REFERENCES 8 ESSAY- GLOBAL FINANCIAL CRISIS The impacts of the financial crisis over the world is the big issue which is being faced every big economy. It has cause various serious issues in all the segmentation of the economic

Global Financial Crisis

   Added on 2020-06-05

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Global Financial Crisis
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TABLE OF CONTENTSESSAY- GLOBAL FINANCIAL CRISIS......................................................................................1Great depression 1929............................................................................................................1Sub-prime mortgage crisis......................................................................................................2Global financial crisis.............................................................................................................2Causes of Financial crisis.......................................................................................................3Impacts of GFC over various economies and reforms were made after global financial crisis..5REFERENCES................................................................................................................................8
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ESSAY- GLOBAL FINANCIAL CRISISThe impacts of the financial crisis over the world is the big issue which is being facedevery big economy. It has cause various serious issues in all the segmentation of the economicissues like education, technology, innovation, research and development, stock market, currencyrates, macroeconomic factors, international trade, GDP etc. are the main issues which are need tobe considers by the economies. There financial crises has huge impacts over the variouseconomies in the world in which Nepal, UK, US and various countries of EU has suffered andsurvived. These crises have impacts over the economy like increment in the housing prices,callops of security market, increment in the prices of commodities as well as increment in theunemployment. These are the serious issues which has been survived bay nations and thenecessary reforms were made.Great depression 1929The decline in the world's economy to a great extent has affected various nationsworldwide. The great depression initially hit the United States as per the great reduction in theprices of shares and crashed down the stock market in October 1929. In result to that, there washuge reduction in the worldwide GDP which fell around 15%. Therefore, there has beenreduction in the production as well as the level of economy also fell down. Thus, many countrieshave planned strategies to overcome with such economic crisis while many nations suffered thiscondition till the World War II. It has affected all the nations whether from sound economy orthe poor one (Clifton, García-Olalla and Molyneux, 2017). The impacts not only affect the nationas wide but every individual has faced such situation like no adequate revenue, taxes levied overcommodities and having losses in the trade practices. In accordance with all the negative issues,it positively rises the international trade during such period. It has risen at 50%. On the otherside, the rate of unemployment also increased at 25% while in some countries it has reached at33% (The Great Depression: What Happened, What Caused It, How It Ended, 2017).In accordance with various Heterodox economic theories which are relevant with therecession, income and employment has facilitated various reasons behind the great depressions.In terms with the great theory of money, interest and employment which states that there hasbeen reduction in aggregate expenditures in the economy which has provoked unemploymentand poverty (Lane and Milesi-Ferretti, 2017). Therefore, the Monetarist theory explains reason1
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behind the great depressions is because of the banking crisis which affected the 1/3rd of world'sbanks as per the reduction in the wealth, decrease in the monetary contraction as well asreduction in the prices which results in deflation (Cukierman, 2017). Due to impacts of this greatdepression, it has caused various issues in the economy of the world, it has crashed out the stockmarket, influenced the currency market, increased the rate of interest, increased bankruptcies,raised the money supply etc.Sub-prime mortgage crisisThe sub-prime mortgage crisis which is basically known as the emergency incurred in thebanking sector for the period between 2007 to 2010. It was incurred due to reduction in theprices of housing securities. The impact of such crisis is that there was decline in the householdspending and industrial investments as well as there has been reduction in the residentialinvestment (Subprime Mortgage Crisis, 2013). The causes behind such crisis is due to increase inthe sub-prime lending and rise in the housing speculation which resulted into rise of thehistorical mortgage from 8% while the approximate minimum range is of 20%. On the otherside, the reason also stated here that there has been increment in the housing liabilities due todisposable personal income at 77% to 127% in the 2007. In context with the increment in theprices of house, the owners were not able to make payment of their housing mortgage. Therefore,it can be said that such crisis brings the pervasive factors in the credit market (Carson, Fargherand Zhang, 2017).Global financial crisisTherefore, there has been several causes of the global financial crises which are due tosecuritisation, deregulation and the wrong time to rise the interest rates over the mortgages. Inaccordance with such impacts which influenced the rise in the mortgage rates for the residentialhousing properties as well as it has affected the stock market throughout the world. This financialcrisis brought the global slowdown of the economy which resulted in the world recession,depressions, decrease in the GDP, inflations and the unemployment. Various nations in the worldhas faced this depression of the economy collapsed while Nepal do not have the direct impacts ofthe financial crisis (The Global Financial Crisis 2008: Its Economic Impact On Nepal, 2018). Onthe other side, Nepal has been benefited with such financial drawbacks due to the drastic changesin the oil prices which are reduced to 149 dollars to 60 dollars per barrel. This reduction in theprices of the oil products has benefited the country on which the government has showed fiscal2
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