Question

1.   By considering the outbreak of at least three financial crises between the end of the First World War and 2008, assess the importance of both domestic and international debts in such crises. What, if anything could be done to limit the build-up of such debts?

Answer 1

Answer.

• The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of US dollars, and a downturn in economic activity leading to the Great Recession.
• The fall in bank lending led to a fall in investment and lower consumer spending.
• Falling house prices created a negative wealth effect, leading to a fall in consumer spending.
• The recession led to a rapid rise in levels of government borrowing.
• And after all, this will led to a huge poverty and hunger which may cannot be recovered within a short span of time.

Hope I have answered it correctly. Have a nice day. Good luck

Hope