Question

Briefly describe the impact from the financial crisis on the following economic variables. How

did this compare to prior recessions in the United States?

a. The unemployment rate

b. GDP

c. Investment

d. Exports

e. Government spending

f. Consumption

Answer 1

A) The unemployment rate : The financial crisis increases the unemployment rate in any country and considering example of2007-08 we can take out exact figure of how it has impacted the entire country. As per OECD report an average unemployment rate in OECD area has reached to 6.3 % in last quarterof 2008,from 5.5 %in the year earlier and it was expected to go upto7. 3%of 2010.

B) GDP There are several other countries as per research and study which shows how global financial crisis ipacted GDP of their countries. According to Link(2008) the global financial crisis that spred all across the world slow down the economy of other countries. In USA total lost from the lost by collapse of real estate until 2008 was 2.4 trillion dollars, while total wealth lost in the economy is 162 trillion dollars.

C Investment The 2008 crisis impacted the investment in real estate as well as in the stock market because market was also impacted by the entire crisis.

D Exports A striking impact of the crisis is that it impact the exports of many country in 2008 crisis world exports plunged 17% while GDP fell 5 %

E Government Spending Any crisis will lead to decrease in GDP and slow down in economy where government need to increase their spending in order to strengthen the economy again which means it has negative impact on government.

F Consumption : As stated crisis of the country decrease the consumption. According to Hurd and Rohwedder 2012 financial crisis can lead to workers earning to fall which lead to decline in demand for the good and due which there will be increase in hunger which will impact the productivity.