ECON210 1501APhase 5 IP
ECON210-1501A-02
Phase 5 IP
2/11/2015
Monetary policy
What monetary policies do you think caused the crisis?
The rapid increase of prices of some goods as speculators rush in caused the crisis. The main reason for this is because many people were not willing to purchase some goods at higher prices yet they were of low value. Therefore, the increase of prices was one of the main monetary policies which caused the crisis (Beetsma, Favero, & Conference 2014). Research shows that there was enough and available liquidity to inflate housing bubble. Then after the increase of prices in the markets, something went wrong and caused the crisis.
What were the effects of the policies implemented in reaction to the crisis? The policies affected the economy of the country because only few people were interested in purchasing the products available in the market. Many people complained that there were long queues in banks because people were trying to withdraw all what they had because of economic changes within the country (Great Britain. 2010). Therefore, monetary policies affected the economy of the country in different ways living a big gap in between the country and the economy. All that happened because of the incentives which happened in the market places for the last few years.
Do you think the solutions worked in the short term? In the long term?
From my point of view, I think the solutions worked in short term. The main reason for this is because many people didn’t want to see the ramifications of their often short sighted actions. The reason why long term was not used is because it requires many things such as adapting earlier solutions to meet new realities, in-depth analysis, patience and compromise of which many people do not posses (Langdana, 2009). Therefore, the solutions worked in a short term rather than long term.
Fiscal policies
What fiscal policies do you think caused the crisis?
From my point of view, it is true to say that the borrowing of money
Phase 5 IP
2/11/2015
Monetary policy
What monetary policies do you think caused the crisis?
The rapid increase of prices of some goods as speculators rush in caused the crisis. The main reason for this is because many people were not willing to purchase some goods at higher prices yet they were of low value. Therefore, the increase of prices was one of the main monetary policies which caused the crisis (Beetsma, Favero, & Conference 2014). Research shows that there was enough and available liquidity to inflate housing bubble. Then after the increase of prices in the markets, something went wrong and caused the crisis.
What were the effects of the policies implemented in reaction to the crisis? The policies affected the economy of the country because only few people were interested in purchasing the products available in the market. Many people complained that there were long queues in banks because people were trying to withdraw all what they had because of economic changes within the country (Great Britain. 2010). Therefore, monetary policies affected the economy of the country in different ways living a big gap in between the country and the economy. All that happened because of the incentives which happened in the market places for the last few years.
Do you think the solutions worked in the short term? In the long term?
From my point of view, I think the solutions worked in short term. The main reason for this is because many people didn’t want to see the ramifications of their often short sighted actions. The reason why long term was not used is because it requires many things such as adapting earlier solutions to meet new realities, in-depth analysis, patience and compromise of which many people do not posses (Langdana, 2009). Therefore, the solutions worked in a short term rather than long term.
Fiscal policies
What fiscal policies do you think caused the crisis?
From my point of view, it is true to say that the borrowing of money
References: Beetsma, R. M. W. J., Favero, & Conference. (2014). Monetary policy, fiscal policies and labour markets: Macroeconomic policymaking in the EMU. Cambridge [u.a.: Cambridge Univ. Press. Great Britain. (2010). Monetary and fiscal policy: Present successes and future problems. London: Stationery Office. Langdana, F. K. (2009). Macroeconomic policy: Demystifying monetary and fiscal policy. New York: Springer. Stehn, S. J. (2009). Optimal Monetary and Fiscal Policy with Limited Asset Market Participation. Washington: International Monetary Fund.