Econ Assignment - Essay Example

ficits, and heavy reliance on energy sources, creating peaks and troughs for oil and energy prices in wake of the Iraq war and the overall political uncertainty across the world. 2. Disinterest from huge financial investors in investing in an economy that relies heavily on external flow of funds. External investors poured in huge amounts of money in the US economy that were overwhelmingly received, causing increase in the value of homes and other commodities. In wake of an uprising from other factors such as political unrest in wake of Iraq war, economic uncertainty due to oil and energy prices, fall of dollar prices, and plummeted stock indices has caused serious concerns among investors, contributing to their reluctance to invest in any economy.

Most investors are forced towards the way either to liquidate or holding out their investments, waiting for the conditions to improvise. 3. Tightened monetary policies of developed nations; it is inclusive of this fact that investors are finding themselves unhinged to invest anywhere. Although nations are now reviewing and easing off their monetary policies to provide high interest rates, however this has a very dawdling effect on motivating the investors to do so. 7. Governance and regulation of economic policies, forming the pinnacle in subdued economic growth of the world.

Since the ‘Great Depression’, this crisis has not only exposed the ill-administration of economic policies of developed nations but has also spawned a series of new debates questioning the effects of these on under-developed and developed economies. These and a number of other reasons in turn have created new problems for dependent economies, in the form of less exports, disinvestment, increased commodity and raw material costs resulting in high production costs incurred, summing up to unemployment, involuntary layoffs, business shutdowns and lawsuits filed under bankruptcy.

To deal with this crisis in an urgent and appropriate manner,