Question

Episode 3 reviews the mot recent events in the series, from 1990s to 2001. In the next few documentaries, we get different perspectives on events after 2001, but what does this episode suggest for the future of the global economy. Does it preview anything that you have witnessed recently in the economy. What does it teach you to watch for in our economic future?

Answer 1

In the year 2001, there are several events occurred, which shows how this will affect the future. Most of the events where mainly social disasters. It erases the lives of so many peoples, like violent earthquake in India, Israeli- Palestinian conflicts, terror attack in US, world economic slowdown etc. Among this the economic slowdown creates huge impact in the economy. There is a weakness in short term prospects for global economic growth. This slowdown risk affect the fund poor countries and it create a stress on developing countries. IMF tried to create a new trade liberalization policy. The economic slowdown creates fear in developing countries and they expect that this type crisis will occur in future also.

The financial markets worried about the deflation and weak growth. There is a high level of decline in the real GDP. There are findings that there is average decline in output and unemployment. The recession in 2001 occurs because of economic development that is insufficient to maintain the expenditure of households and firms; this reduces the aggregate demand, output and employment. Other factors which cause the slowdown are international disturbances, like the conflicts between Israel and Palestinian, terror attacks in different parts of the world; technology shocks, energy price shocks, and the actions taken by monetary authority to maintain unanticipated rise in general price level.