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8 Cards in this Set
- Front
- Back
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what is a financial bubble? how do they form? |
a persistent increase in the price of an asset, far above their actual value. form by people being followers and borrowing money. |
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how did the formation of a bubble contribute to the crisis and great recession/when? |
2007-2009 was great recession, relationship to mass unemployment, rising govt deficits, and austerity policies. the collapse of the bubble in US housing market led to crisis and recession. |
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how did the us govt and europe govts initially respond to the crisis? |
transmission from financial to real economy began immediately in the US, then to europe. they had large scale policy interventions: 1. federal govt deficit spending 2. central bank monetary stimulus (driving down short term interest rates) 3. financial sector bailouts |
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what was the relationship between the initial responses and the subsequent turn to austerity policies? |
views became widespread that the biggest economic problem was govt spending and not mass unemployment, so priorities shifted and austerity policies became dominant in us/europe |
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austerity policies |
government cuts spending and raises taxes. |
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what happened to total US household wealth during the financial bubble years after the bubble burst? |
???? |
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what has happened to the US manufacturing jobs and wages over the past 30 years? |
they have dramatically dropped over time. the average manufacturing workers were getting raises every year from 1950 to 1973 until no more, and it dropped from 21 to 19 (wage stagnation)` |
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to what extent have these problems with manufacturing sector and wages tied to the great recession? |
the austerity policies, excessive govt indebtedness, and immigrants taking US jobs |
