Credit Crunch

Only available on StudyMode
  • Download(s) : 119
  • Published : December 6, 2012
Open Document
Text Preview
Table of Content

Introduction..................................................................................

1.0 Impacts Of Credit Crunch On U.S........................................ 1.1 Impact on U.S Economy...................................................... 1.2 Impact on Interest Rates...................................................... 1.3 Impact on Banking Sector.................................................... 1.4 Impact on Mortgages and Credit Lending Agencies............ 1.5 Impact on GDP..................................................................... 1.6 Impact on Inflation................................................................ 1.7 Impact on Employment in U.S..............................................

2.0 Implemented Strategies To Overcome The Impacts............ 2.1 Fiscal Policy............................................................................ 2.2 Seek Direct Foreign Investment............................................. 2.3 Establish Proper Monitoring System...................................... 2.4 Strengthening the Country’s Internal Infrastructure...............

Conclusion......................................................................................

References......................................................................................

INTRODUCTION
“An immediate or sharp condition of unavailability of liquid money from the banks and money lending agencies in an economy is known as credit crunch”. The 2007-2009 global financial crises are known as Credit crunch which is described as economic recession and it is considered as worst financial crises after the last financial crises in 1930s. These financial crises resulted in the failure of many large financial agencies along with the liquidation of many banks announced by the government. The impacts of credit crunch spread diversely all around the world but United States is the country felt the jolting shocks due to this economic crisis which spread all the major world economies. It resulted in low GDP, higher interest rate, decline in the value of Dollar, higher prices for houses, decline in the value of assets, low economic conditions, higher inflation rate, unemployment and many more. These financial crises were required an immediate solution and rescue operation to save the world from starvation because United States is a leader of world economies. In order to solve rest of world and minimize the impacts government started rescue operation and designed policies. This report consist of two parts; the first details about the impacts of credit crunch on United States and the second part elaborates the government played role by designing strategies to minimize these impacts.

1.0 IMPACTS OF CREDIT CURNCH ON U.S

1.1 IMPACT ON U.S ECONOMY

Monetary policy is a basic tool in decision making for any party, since it is important for every part of the decision that is why it affects the overall economic conditions. Most of the trading business in done in U.S Dollar which means that Dollar value must be stable in order to keep economy stable. However due to the credit crunch and shortage of Dollar the trading and global business got affected because the value of Dollar was not stable. Even though in the history there were many credit crises such as Japanese and Russian crises but still it did not affected the world economy. During credit crises in U.S most of the world business stopped because the Dollar value kept fluctuating and traders were hesitating to exchange business which made the country unable to earn money through exchange because of the lack of money to pump in the market. The reason of low economic conditions in the country are described because U.S manipulates the world economy which means the absence of business in other parts of the world will decrease the business...
tracking img