8.5 Global Economic Crisis

• What does the Global Economic Crisis typically refer to?

  Financial distress and downturn
• Financial speculation is one of the major causes of the Global Economic Crisis.
• The Global Economic Crisis can lead to increased unemployment.
• What are two policy tools used during recovery efforts for the Global Economic Crisis?

  Monetary and fiscal policy
• The Global Economic Crisis typically starts due to financial speculation, regulatory failures, and geopolitical events.
• Match the causes of the Global Economic Crisis with their effects:

  Financial speculation ↔️ Recessions

  Regulatory failures ↔️ Increased unemployment

  Geopolitical events ↔️ Reduced global trade
• What is one effect of a housing bubble burst on the economy?

  Bank collapses
• The function $y =$$f(x)$ can illustrate how initial events amplify the spread of the crisis.
• What is the Global Economic Crisis characterized by?

  Financial distress and downturn
• Financial speculation can lead to recessions during the Global Economic Crisis.
• Match the causes of the Global Economic Crisis with their effects:

  Financial speculation ↔️ Recessions

  Regulatory failures ↔️ Increased unemployment

  Geopolitical events ↔️ Reduced global trade
• What are the three primary triggers of the Global Economic Crisis?

  Financial speculation, regulatory failures, geopolitical events
• The function $y =$$f(x)$ can visualize how triggering events lead to economic decline.
• What is one example of regulatory failure that can trigger the Global Economic Crisis?

  Inadequate financial oversight
• The Global Economic Crisis spreads through the contagion effect, which impacts trade and investment flows.
• Steps in the spread of the Global Economic Crisis

  1️⃣ Initial financial failures in key markets

  2️⃣ Contagion effect spreads to other countries

  3️⃣ Reduced aggregate demand lowers production

  4️⃣ Businesses lay off workers, increasing unemployment
• What is one social impact of the Global Economic Crisis?

  Increased poverty and inequality
• The exponential decay function $y =$$ae^{ - kt}$ can depict the spread of the crisis's impact over time.
• The interconnectedness of global markets contributes to the spread of the Global Economic Crisis through the contagion effect.
• Match the economic impacts of the Global Economic Crisis with their corresponding social impacts:

  Sharp recessions ↔️ Increased poverty and inequality

  Decreased global trade ↔️ Social unrest and political instability

  Currency devaluation ↔️ Declining health and education access
• What are two types of government interventions used during the Global Economic Crisis?

  Fiscal and monetary policy
• The Keynesian multiplier effect $\Delta Y =$$k \cdot \Delta G$ illustrates how increased government spending can stimulate GDP.
• One long-term consequence of the Global Economic Crisis is the restructuring of the global financial system.
• What is one ratio used to measure the long-term debt resulting from the Global Economic Crisis?

  Debt-to-GDP ratio