Global Financial Crisis Overview
24 Questions
0 Views

Global Financial Crisis Overview

Created by
@HonoredTiger2556

Podcast Beta

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What was a primary trigger of the global financial crisis of 2008?

  • Homeowner mortgage defaults (correct)
  • Increase in stock prices
  • Decline in global trade
  • Government fiscal policies

    • The global financial crisis led to a significant increase in employment across the globe.

    False

    What kind of economic policies did governments implement in response to the global financial crisis?

    Expansionary fiscal and monetary policies

    The financial crisis of 2008 resulted in a severe worldwide economic _____, the most significant since the 1930s.

    <p>recession</p> Signup and view all the answers

    Which organization provided massive loans for bailouts during the global financial crisis?

    <p>International Monetary Fund</p> Signup and view all the answers

    Match the following phases of the business cycle with their characteristics:

    <p>Expansion = Rising economic activity and low unemployment Peak = Maximum output and employment Recession = Decline in economic activity and rising unemployment Trough = Lowest point of economic activity</p> Signup and view all the answers

    International stock markets experienced a significant increase during the global financial crisis.

    <p>False</p> Signup and view all the answers

    What was one major effect of the global financial crisis on global trade?

    <p>Sharp decline in global trade</p> Signup and view all the answers

    What is the primary reason for the government to manage the economy?

    <p>To maintain a balance within the nation's economy</p> Signup and view all the answers

    Low consumer confidence can lead to a decrease in business borrowing from financial intermediaries.

    <p>True</p> Signup and view all the answers

    Describe what happens in a recession regarding consumer spending and its effect on businesses.

    <p>During a recession, consumer spending declines, which results in reduced demand for goods and services, negatively impacting businesses.</p> Signup and view all the answers

    When banks charge higher interest rates for business loans, it is usually a measure to __________ inflation.

    <p>slow</p> Signup and view all the answers

    Match the economic term with its correct definition:

    <p>Economic Recession = A period of economic decline characterized by falling GDP Consumer Confidence = The degree of optimism that consumers feel about the overall state of the economy Interest Rates = The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets Government Regulation = Laws and rules that oversee how businesses can operate</p> Signup and view all the answers

    Which of the following factors could lead to low demand for imports in Australia?

    <p>Low consumer confidence</p> Signup and view all the answers

    Stagnant wages can contribute to a decline in government taxation income.

    <p>True</p> Signup and view all the answers

    Explain the relationship between low consumer confidence and employment stability.

    <p>Low consumer confidence can lead to unstable employment as businesses may cut jobs due to decreased spending.</p> Signup and view all the answers

    Which of the following is NOT one of the five sectors in the circular flow model?

    <p>Retail Sector</p> Signup and view all the answers

    Businesses rely on consumers for the resources needed to produce goods and services.

    <p>False</p> Signup and view all the answers

    What term is used to describe the money flowing into the economy?

    <p>injections</p> Signup and view all the answers

    When consumers buy goods and services, it is known as __________.

    <p>consumption</p> Signup and view all the answers

    Match the phases of the business cycle with their descriptions:

    <p>Expansion = Increase in economic activity and employment Peak = The highest point of economic growth Recession = A period of economic decline Trough = The lowest point of economic activity</p> Signup and view all the answers

    Which of the following best describes a characteristic of an economic recession?

    <p>Decreased economic activity</p> Signup and view all the answers

    The global financial crisis had a positive impact on businesses worldwide.

    <p>False</p> Signup and view all the answers

    What is the role of financial institutions within the circular flow model?

    <p>To facilitate savings and investments</p> Signup and view all the answers

    Study Notes

    The Global Financial Crisis of 2008

    • The US financial system lost confidence in September 2008, leading to the bursting of the housing bubble.
    • Homeowners defaulted on their mortgage payments, causing instability in the system.
    • The crisis spread globally, impacting numerous countries.
    • Major financial institutions went bankrupt or were acquired by other entities.
    • Governments intervened with rescue packages for their financial systems.
    • The GFC triggered a worldwide economic recession, surpassing any other economic downturn since the Great Depression.
    • International stock markets collapsed, decreasing economic growth and trade globally.
    • Unemployment rates saw a significant increase.
    • The International Monetary Fund provided substantial loans to struggling countries.
    • Governments implemented expansionary fiscal and monetary policies to stimulate consumer spending and business investment.

    The Role of the Government

    • The government plays a crucial role in protecting consumers through regulation of the financial sector.

    Interdependence between Sectors in the Circular Flow of Income

    • Changes in one sector can have a direct influence on other sectors within the economy.
    • For example, unstable employment, low consumer confidence, and reduced spending can negatively impact businesses, leading to lower borrowing from financial institutions.

    The Circular Flow of Income Model

    • This model showcases the connections between consumers, businesses, financial institutions, the government, and the overseas sector.
    • Injections represent money flowing into the economy (e.g., government spending, investments, exports)
    • Leakages represent money flowing out of the economy (e.g., taxes, savings, imports).

    Consumer and Business Sector

    • The consumer and business sectors are interdependent.
    • Businesses rely on consumers for purchasing goods and services, while consumers rely on businesses for income and access to goods and services.
    • The household sector encompasses consumers and firms.
    • Firms utilize resources provided by households to create goods and services (production).
    • Households use their income to purchase goods from businesses (consumption).

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Mandatory Theory Booklet - Economic And Business Environment 2024 PDF

    Description

    Explore the events and consequences of the Global Financial Crisis of 2008. This quiz covers topics such as the housing bubble burst, government interventions, and the worldwide economic recession that followed. Test your knowledge on how this crisis reshaped the global economy.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser