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Question 4
“During the 2008 Financial Crisis, the nominal interest rates of all major industrialised countries hit the lower bound and policymakers lost any power to stimulate the economy.” Comment and explain
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- a. based on the functions of the banking system, give reasons why governments bail out banks during an economic crisis b. is the world heading for recession? explain the conditons under which the world can be classified as being in a recession as COVID- 19 persists. Explain linking the pandemic to the various stages of a recessionAmerican International Group (AIG) stood at the centre of the financial crisis of 2008. It was one of the main institutions issuing credit default swaps. With default rates increasing and the economic climate worsening, it found itself in liquidity problems. AIG was forced to seek a government rescue and was effectively nationalised. Shortly after the bailout in 2009, it also become the centre of a media firestorm in the so-called AIG bonus payments controversy. Questions:1. Critically evaluate the factors leading to AIG’s liquidity problems, bailout, and nationalisation. 2. Critically assess the reasons and judgment behind the AIG bonus payments controversy. Write a short essay imagining what would have happened if AIG hadn’t been saved.INTERNATIONAL BUSINESS AND TRADE Mini-Case Synopsis and Questions In 2008 and 2009, international financial markets suffered large declines in stock, bond, and real estate prices. Due to excessive government spending and related borrowing, Greece experienced a debt crisis that worsened after the introduction of the euro. To head off default, the Troika provided Greece a bailout in 2012. Some experts believe Greece should exit the euro entirely, but others argue that if other countries follow Greece, the euro and the EU itself could be seriously damaged. Questions: How did Greece get into trouble with its government debt? Did joining the Eurozone help them pay rising government debts? Explain your answers. Should Greece exit the euro? How would it benefit? What could go wrong? Explain your answers.
- impact of the global financial crisis of 2008-2009 Shenkar, O & Luo, Y (2007) International business 2nd ed Thousand Oaks, CA: Sage Publications Evaluate the impact of the global financial crisis of 2008-2009 on the economies of industrialised countries and emerging markets What effect do problems like these have on attitudes towards free trade?A4 Finance Suppose the FED has just learned that the Treasury will need to borrow a much larger amount of money than originally expected. Discuss how this incident could affect the degree to which the FED changes their monetary policy. If there were changes, would you agree with them?Question 2The Government of Ghana in an attempt to stimulate the Ghanaian economy after the COVID 19 pandemic has set aside GH¢600 million as a stimulus package for businesses. These stimulus packages are to be in the form of soft loans for businesses. However, some believe that these loans must be extended to firms in industries that are worst hit by the pandemic. As the Finance Director of your company, you have been tasked to present a proposal to the Board of Directors of your company for consideration. Your proposal must address the following;i. The negative impact of the COVID 19 pandemic on the operations of your firm, justifying why your firm needs such a stimulus package? Your arguments should be situated within the industry within which you operate.ii. With your understanding of lessons on capital structure, which other four (4) factors should your firm consider before choosing this source of debt finance?iii. Discuss four (4) risks that your company is likely to be exposed…
- Question 2The Government of Ghana in an attempt to stimulate the Ghanaian economy after the COVID 19 pandemic has set aside GH¢600 million as a stimulus package for businesses. These stimulus packages are to be in the form of soft loans for businesses. However, some believe that these loans must be extended to firms in industries that are worst hit by the pandemic. As the Finance Director of your company, you have been tasked to present a proposal to the Board of Directors of your company for consideration. Your proposal must address the following;i. The negative impact of the COVID 19 pandemic on the operations of your firm, justifying why your firm needs such a stimulus package? Your arguments should be situated within the industry within which you operate.ii. With your understanding of lessons on capital structure, which other four (4) factors should your firm consider before choosing this source of debt finance?iii. Discuss four (4) risks that your company is likely to be exposed…29.World Central Banks Act as EU Growth Stalls The European Central Bank(ECB), along with its U.S., Japanese, Swiss, and British counterparts, announced they would inject extra U.S. dollar liquidity into banks facing a shortage of the U.S. dollars. European bank shares have plunged over the past weeks as their usual sources of U.S dollars. have dried up on concerns they might be hit by a Greek debt default, and the announcement sparked a strong bank and general stocks rally. Source: AFP, September 15,2011 How can group of central banks "inject extra U.S. dollar liquidity"? What will such an action do to the quantity of U. S dollars in Europe? 30.Banks in New Transylvania have a desired reserve ratio of 10 percent and no excess reserves. The currency drain ratio is 50 percent. Then the central bank increases the monetary base by $1,200 billion. a. How much do the banks lend in the first round of the money creation process? b. How much of the initial amount…a. Based on the functions of the banking system, give reasons why governments bail out banks during an economic crisis? [Not more than one-page] b. Is the World heading for a recession? Explain the conditions under which the world can be classified as being in a recession as COVID-19 persists. Explain linking the pandemic to the various stages of a recession. [Not more than one-page]
- 1.Applying microeconomics principles, explain why was the real estate market ( properties and homes) in US and world wide collapsed due to lehman failures? 2. world went into recession due to lehman brothers and subprime crisis, but where exactely the money gone? how suddenly money disappered from the world economy8) A market decline of 23% on a day when there is no significant macroeconomic event ______ consistent with the EMH because ________. A) would be; it was a clear response to macroeconomic news B) would not be; it was not a clear response to macroeconomic news C) would not be; it was a clear response to macroeconomic news D) would be; it was not a clear response to macroeconomic news Please justify your answer.