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Macro - Essay Example

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The number of unemployed is rising in most economies, Andy Kilmister (2008). Among developed economies, “the number of unemployed has more than doubled in the United States of America since the beginning of…
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Global Financial Crisis and number Andy Kilmister Source: IV Online magazine, 07/12/2008 Global Financial Crisis
Summary: This article points to the Global Financial Crisis (GFC). The number of unemployed is rising in most economies, Andy Kilmister (2008). Among developed economies, “the number of unemployed has more than doubled in the United States of America since the beginning of the recession in December 2007” (p. 45). The unemployment rates in the euro area and Japan have also increased notably. The actual situation is even worse as it does not include unemployment data for discouraged workers who are unemployed but not currently looking for work because they believe no jobs are available for them. Unemployment rates in transition economies and developing countries have also moved higher, “in particular in the Commonwealth of Independent States (CIS) and Central and South-eastern Europe” (Andy Kilmister, 2008).
Economic theory: According to Andy Kilmister (2008), in the years leading up to the economic crisis that began in 2008, the global economy showed strong Economic Growth (EG). Over 2001-07, real world gross domestic product (GDP) grew by more than 3 percent a year, exceeding annual growth of 2.7 percent during the 1990s. The large influx of money into the Western financial system enlarged the “supply of funds available for loans and investment relative to the profitable opportunities available” (p. 67). This consequence, combined with “insufficient government financial regulation and supervision, resulted in investors and banks making riskier loans, such as for subprime home mortgages and mortgage refinancing in the Unites States” (Andy Kilmister, 2008).
Interest on the article: The world financial crisis is a recent world effect, which affected almost all countries in world, Andy Kilmister (2008). It impresses me most because, to come out of the crisis, economic knowledge was needed to salvage the situation. Economic theory played a major role, “for instance the use of interest rates to regulate the cost of borrowing from financial sectors” (p. 23). Also, the use of fiscal policies, for instance stimulus packages in the financial and non-financial sectors (Andy Kilmister, 2008).
Andy Kilmister. (2008). Global Financial Crisis: The Economic Crisis and its Effects. IV Online magazine: London Read More
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