Week 10 Flashcards
1
Q
What are the four factors of production?
A
- Land
- Labour
- Capital
- Enterprise
2
Q
What is inherent instability based on?
A
The interaction between international economics, domestic policies, domestic economics, international policies
3
Q
What happened in the Asian Monetary Crisis?
A
- 2nd of July 1997 Bank of Thailand which was managing a fixed exchange rate, devalues the Baht.
- End of August 1997 - Malaysia, Indonesia and the Philippines all devalued o People began to sell currencies to buy US currency back.
4
Q
What were the international causes of the Asian Monetary Crisis?
A
o Hedge Funds and Speculators
o Credit crunch and loss of competitive edge
5
Q
What were the domestic causes of the Asian Monetary Crisis?
A
o Vulnerabilities
o Susceptibilities
6
Q
What were the state causes of the GFC?
A
Global Terrorism, Domestic Housing and Government Policy
7
Q
What were the market causes of the GFC?
A
- Low interest rates + availability of investment funds and the need to invest to make a profit.
- High risk (sub-prime) loans promise higher returns (yields).
- USA Real Estate has perceived low risk.
- High returns ‘sells’ Collateralised Debt Obligations (CDOs) globally.
- Lack of Risk Analysis and Knowledge of loan terms and debtors.
