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Briefly comment on your thoughts on the 2008 financial crisis.

Briefly comment on your thoughts on the 2008 financial crisis.

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Answer #1

Financial crisis of 2008 is also called great recession as the economy growth rate suffered and unemployment rate increased significantly. The demand was abysmally low. The excessive lending to ineligible borrowers and deregulation of financial sector led to the failures of financial institutions. Thus it led to the recession and fall in the output.

Federal reserve and government acted swiftly to restore equilibrium in economy. Thus government increased expenditure and federal reserve reduced interest rate to drive up aggregate demand.

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