Without Assignment Example | Topics and Well Written Essays - 750 words

Without - Assignment Example These new policies drained the reserves but were instrumental in activating the lender of last resort policy. Compare the Feds response in the 2007–2009 financial crisis to its response to the economic downturn of the 1930s, and how its actions in 2008 helped prevent a repeat of the earlier economic downturn. (5 points) The two crises are very similar, the cost of housing shot up in the 2007 – 2009 crises and the cost of gold had shot up in the downturn of the 1930s. Roosevelt’s New deal policy was just like the bailout that happened recently. The bailout helped the economy regain its stability and also catered for the causes of the crisis. As such, there would be no repeat of the same. Your brother knows you are taking a class in money and financial institutions and shows you the yield curves for December 4 and December 7, 2007. He asks you what might explain the shift in the curve between these two dates. What do you tell him? (5 points) Discuss the relationship between consumption growth and the returns to NASDAQ. What impact does this have on the AE curve? Using this, what do you think happened to real GDP from 1991 to 2000? (5 points) Consumption growth leads to an increase of return for NASDAQ. This causes a rise on the AE curve due to the increased productivity of the population and the need for more in consumption. The real GDP has had a constant growth over the decade running from 1991 to 2000. In the 1990s, Japan suffered what is called a â€Å"lost decade† of economic growth. In 2007–2009, the United States suffered through the worst recession since the Great Depression. Compare the causes and impact of each of these two countries experiences. (10 points) The experiences were caused by the bubble collapse, in asset price for Japan and housing for the United States. In both cases, thee was investment in the too big to fail institutions and their losses led to crises. There were