What Is Economic Crisis?

Topics: Financial crisis, Financial crisis of 2007–2010, Economics Pages: 4 (1474 words) Published: December 4, 2012
The repercussions of the economic crisis are not going to disappear in the short What is economic crisis?
* An economic crisis is A situation in which the economy of a country or countries experiences a sudden downturn brought on by a financial crisis. A financial crisis is a situation when money demand quickly rises relative to money supply. Until a few decades ago, a financial crisis was equivalent to a banking crisis. Today it may also take the form of a currency crisis. Many economists have come up with theories on how a financial crisis develops and how it could be prevented. There is, however, no consensus and financial crises are still a regular phenomenon. A stock market crash is an example of a financial crisis. An economy facing an economic crisis will most likely experience a falling Gross Domestic Product or GDP, a drying up of liquidity and rising/falling prices due to inflation/deflation. An economic crisis can take the form of a recession or a depression. Also called real economic crisis. Or in shorter words a long-term economic state characterized by unemployment and low prices and low levels of trade and investment.

Introduction to the global economic crisis:
* The global financial crisis, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.

Causes according to experts, in this case the expert is Mr.
Joseph Stiglitz’s, former Chief Economist of the World Bank and university professor at Columbia University. He affirms that the main causes off the current economic crisis are the * -Inadequate capital requirements, which resulted in insufficiently capitalized institutions having an incentive to take excessive risk like the federal reserve or the European central bank, having low...
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