Great Depression And Financial Crisis Flashcards
Level of unemployment in the Great Depression
14.7%
UK government response to the Great Depression
Expansionary Monetary Policy
How did the UK government use interest rates as loose monetary policy during the GD?
Cut in interest rates - 9% in 1931 to 0.6% in 1933
How did the UK government use money supply as a loose monetary policy in the GD?
Increased money supply by 34% between 1934-1936
How did the USA respond to the GD?
Public works programme (stimulate employment + output), budget deficit, raised agricultural output, increased trade, provided a fiscal stimulus into the economy, left gold standard (fixed exchange rate)
What was the significance of US response to the GD?
First example of fiscal policy
Causes of the Great Depression?
Wall Street Crash 1929, had global effect as many countries relied on US for global trade
4 Main causes of the 2008 financial crisis?
Over-lending of mortgages, crash in house prices, de-regulation of banks, investment banks
How did overlending of mortgages cause the 2008 financial crisis?
Subprime mortgages- mortgages given to people who were unable to pay them back , lead to them defaulting
How did investment banks cause the 2008 financial crisis?
Many investment banks invested into sub-prime mortgage banks, when housing market bubble burst and people defaulted on loans banks lost lost of money
How did a housing market bubble cause the 2008 financial crisis?
Increased demand for homes due to increase in number of mortgages given caused house prices to rise massively until bubble burst causing prices to drop massively
How did a lack of regulation cause the 2008 financial crisis?
Allowed these poor practices to occur,
Structural issues causing the 2008 financial crisis?
Years of low interest rates, lack of regulation, excessive bank risk-taking
Effects of the financial crisis on public
Higher taxes to bailout financial banks + loss of savings as banks dissolved
Effects of financial crisis on workers
Lost jobs
