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2008 Economic Crisis

A sub-category dedicated to the economic crisis that has affected us all

500 Questions

In an accounting context what is taking a bath?

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Taking a bath in an accounting context refers to writing off or recognizing a substantial loss on an asset or investment. It typically happens when an organization or individual intentionally reduces the value of an asset or investment in order to reflect its true market value or to offset other gains. This can result in decreased profits or a negative impact on financial statements.

When a stortage exists in a market and price?

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rises, it means that there is high demand for a product or service but limited supply. The increase in price serves as a signal to suppliers and encourages them to increase production to meet the demand. However, if the shortage persists, it can lead to prolonged high prices and potential imbalances in the market.

Why is it that relatively poor countries uses labor intensive technology while rich countries tend to use capital intensive technology?

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Relatively poor countries often have abundant labor resources and limited access to capital. Therefore, they tend to rely on labor-intensive technology as it is more cost-effective for them. On the other hand, rich countries have higher levels of capital and advanced technology, enabling them to invest in more capital-intensive technologies that increase productivity and efficiency.

What liberalization has taken place in the economy since 1991?

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Since 1991, India has implemented various liberalization measures to open up its economy. These include reducing trade barriers and import restrictions, deregulating industries, privatizing state-owned enterprises, and attracting foreign direct investment. The liberalization policies have allowed for increased integration with the global economy and contributed to economic growth, technological advancement, and an expansion of the private sector in India.

How did the us economy fall into a financial crisis?

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I think this article I read about sums it up. http://www.associatedcontent.com/article/1078557/did_greed_cause_the_us_economy_to_fall.html?cat=3 The current U.S. economy has fallen and people are wondering how this happened and what caused the economy to fall. One reason the U.S. economy is unstable is because of greed. Banks became too greedy and gave loans to people that couldn't afford them. And consumers became too greedy and bought homes, cars and things on credit cards they couldn't afford.

As a result of this, the stock market is unstable. And the financial news is causing it to increase or decrease whenever something good or bad happens. Several banks are filing for bankruptcy and some banks are being bought by other companies so they can avoid bankruptcy.

One of the main industries that is being affected by the current economy is the real estate industry. So many home buyers were given a chance to own a home through the subprime loans. These loans gave people the false impression that they could afford a home that was out of their price range. But as soon as the rates and payments for the loans increased, these owners began to see that it was a bad idea to have a subprime mortgage. Many homeowners have lost their homes because of this. The subprime loans are one the reasons why so many homes have gone into foreclosure.

Another example of people being greedy in the real estate industry is the home builders. Before the housing market declined, home builders were building so many homes and believed they could make a profit from every home they built. When the housing market declined, home builders realized they built too many homes and they were going to have a hard time selling them. The current economy has forced home builders to cut the prices of their homes and lose profits.

The car industry is another example of an industry that has also been greedy. Several car manufacturers, mainly the U.S. automakers, have ignored the idea of making more fuel efficient cars and have continued to make gas guzzling vehicles. Because of the wrong choices they have made the U.S automakers are losing money. ****************************************************************** The housing crash, however, did not happen overnight. A number of factors contributed to the housing crash resulting extensive foreclosures and plummeting housing prices to their all time low. One of the main cause for the housing crash lies in the fact that banks and financial institutions were lending mortgages at 5 to 10 times the annual incomes of people, which was way above the safe value of 3 to 4 times. These financial powerhouses used aggressive terms and conditions but did very little scrutiny while providing mortgages. This led to an easy cash flow in the market which fueled the housing prices as well. The US economic meltdown also played a major role in the housing market crash world over. Foreign investors who had invested in the real estate market in US had to declare bankruptcy owing to massive loss. The housing crash is expected to cost the banking system a whooping $2 trillion dollars.

Read More : <a href=" http://www.housingnewslive.com/housing-market-crash-in-us.php">http://www.housingnewslive.com/housing-market-crash-in-us.php</a>

What makes a business successful?

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A successful business will use all the proper tools to his advantage. Online entrepreneurs should use the most up to date entrepreneur resources to get ahead of the competition and stick out from the crowd. Press release distribution, social media, and tell a friend script are just a few items an entrepreneur can find online to help their small business become successful.

How much money do Ethiopians have?

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Government politician: average 110,000.00 usd.

Government employee: average 1,000.00 usd.

Private sectors: average 20,000.00 usd

Other citizen(farmers): average 100 usd.

The rest(more than 70%): waiting for 1 die

Who is the CEO of Cadbury India?

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Manu Anand is the current CEO of Cadbury India and South Asia. Previously Anand Kripalu was the CEO of Cadbury India.

What are some parallels involved in the economic crisis of the 1920's and in the economic crisis of the 2000's?

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The similarities are striking according to Bernard C. Beaudreau, professor of economics at Université Laval and author of "How the Republicans Engineered the Stock Market Crash of 1929 and the Financial Meltdown of 2008." He argues that both were the result of unsutainable policy measures aimed at propping up aggregate demand - the Smoot-Hawley Tariff Bill in 1929 and financial deregulation (increasing household debt) in 2008. When it became obvious that both would fail, financial markets plunged. He points out a little known fact, namely that on the day of the first stock market crash in October 1929, the Smoot-Hawley Tariff Bill suffered its worst day ever in Congress.

The upshot of his work is that financial markets are not to blame, rather poorly thought-out government policy is!

Opposite word for recession?

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* surge * boom time * upswing

How the recession last for?

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Depends on how long were going to sit here and watch it happen and not do anything about it.

What is the expected inflation rate for 2010?

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There is no official predicted rate of inflation for 2009. Official inflation statistics do not go that far into the future, but you could probably find estimates on various economic magazines such as the Wall Street Journal, IBD, or The Economist.

US Recessions how long?

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A recession is a term used to signify two consecutive quarters (6 months) of decline in the nations GDP. This recession is expected to last for atleast another 2 quarters. By the 3rd quarter of 2009 things are expected to be back to normal.

Let us hope for the best.

Are the republicans to blame for the stock market crash of 2008?

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hopefully I can help... The stock market woes go well beyond the demonized figure of the GOP that has been characterized over the last few years.

1. The fall has seen it's hits that included a stressed American deficit due to funds that once topped over $50 million spent per week in Iraq (that's more than what is spent on cancer research in a single year).

2. Rising gas prices due to oil speculation and the inability of the US to avoid the heavy handed rule of OPEC by becoming more energy independent played a huge role in slowing our pockets.

3. The real estate market had a bubble that burst and sprayed most of the American dream. Unfortunately, most of us WERE living within our means but the other portion of Americans that were either negligent, overoptimistic, or gullible.

4. Real estate markets, of course, put a shotgun effect through our "strong" fundamentals, taking out banks and credit industries along the way who failed to have anyone check up on just what the Hell was happening in the real estate biz. Call it the worst presidency efficiency to date but sadly, the Congress and Senate, backed by the all supreme Nancy Pelosi had their own approval rating of around 14% (ataway to suck at your job, government paid officials!). The best plan in DC at the time was to blame the other guy even though Barney Frank and his CEO lover were right at ground zero when this real estate bomb went off, and likely could have credited the few who did warn us on the matter before it hit.

5. Millions of other cogs were at work as well: Hurricane Ike reminded wall street of the inescapable flood damage to come. Grass and forest fires off and on in one of the most economically bewildered states in America -not to mention overtaxed and overpriced- led by Arnold the great was disheartening as well. Basically, If you walk down Wall Street and cough the wrong way, you have effected the stock market.

6. Once problems arose, nervous short term traders pulled out altogether (or jumped in too soon and lost a lo of free cash) as long term investors waited till the last minute to see their stock prices go down down down when they should have sold sold sold. If you keep an investment stock for 12 months, you avoid a capital gains tax of 15% of what you make and depending on the situation, avoid the tax man a little more in April. Let's see, 15% tax or 40% loss by sitting on your hands and not freeing up money for the market which in turn, made the money in the market disappear. Then again, who would by stock in Fannie Mae when it dropped from $30 to 40 cents a share?

7. The value of the American dollar dropped, as an outcome of all of the combined and then some.

Could we have avoided it? Possible. Should we have imposed more regulations on wayward companies? That doesn't promote free capitalism but two major companies, one in India, the other under the direction of Madoff do come to mind.

Would dropping out of Iraq been a better idea? Good question. Ask a Marine. Iraqis have been liberated from the ruthless slaughtering hand of Saddam. Over 400 WMD's, including a mobile-nuclear project and mustard gas were found but were never reported for two reasons. 1. WMD's must meet a killing capacity requirement set by the UN before it is considered a weapon of mass destruction, anything under that limit is considered a backyard explosive. 2. The scare of militant Muslims in Iraq would create a second McCarthyism where we would in a panic deny the rights of nonmilitant Muslims who are peaceful and rightful US citizens. These things were not reported, as ordered by the President, so that America would be saved from itself.

Does the American presence in the Middle East serve a purpose? Yes. Insurgents, who for the most part are not Iraqi but rather Egyptian, Iranian, Syrian and so on, were being paid $3,500 to be funneled into Iraq to shoot at American soldiers (women are paid $9,000, all in oil money). So we could have a Professional Shoot Out with Militant Islam in someone else's backyard, or on a highjacked plane right in front of your doorstep. Sounds absurd, I know, but President Obama is a perfect example of one who decided, after receiving the proper info, that maybe jumping ship in the Middle East would have to be sidelined because of the influence we must maintain there.

Are the Republicans to blame or is it that things just suck for everyone? The administration should have been able to prevent such a historical calamity, correct? On the other hand, hindsight is always 20/20. You make the call.

-MIKE

...and may God bless the next man wiling to carry such a heavy burden on his back. When there is an economic downturn and no one is your friend, it's a zero or hero, chump or champ position behind that desk.

As a student of management what are the factors responsible for inflation and how would you look at the problem of inflation while collecting data and analyzing trends over the last five years?

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== == As a disclaimer, the following paragraph is not supported by most economists. Most economists would suggest that the Federal Reserve might have helped it along but was far from actually causing inflation. Also, the question relates to how a student of management would look at the problem of inflation, not the causes of inflation.

Inflation in the United States is a result of money management policies instituted by the Federal Reserve. This was obvious to the opponents of the Federal Reserve in the 1913 Congress. The Federal Reserve Act was passed in a rush session of Congress just before they left on Christmans break, December 13, 1913. Representative Guernsey of Maine, a Republican on the House Banking and Currency Committee, said "This is an inflation bill, the only question being the extent of the inflation." In:http://wiki.answers.com/Q/FAQ/1786 Demand side factors: 1- Increase in nominal money supply: Increase in nominal money supply without corresponding increase in output increases the aggregate demand. The higher the money supply the higher will be the inflation. 2- Increase in disposable income: When the disposable income of the people increases, their demand for goods and services also increases. 3- Expansion of Credit: When there's expansion in credit beyond the safe limits, it creates increase in money supply, which causes the increased demand for goods and services in the economy. This phenomenon is also known as 'credit-induced inflation'. 4- Deficit Financing Policy: Deficit financing raises aggregate demand in relation to the aggregate supply. This phenomenon is known as 'deficit financing-induced inflation'. 5- Black money spending: People having black money spend money lavishly, which increases the demand un-necessarily, while supply remains unchanged and prices go up. 6- Repayment of Public Debts: When government repays the internal debts it increases the money supply which pushes the aggregate demand. 7- Expansion of the Private Sector: Private sector comes with huge capitals and creates employment opportunities, resulting in increased income which furthers the increase in demand for goods and services. 8- Increasing Public Expenditures: Non developmental expenditures of government lead to raise aggregate demand which results as increased demand for factors of production and then increased prices. Supply side factors 1- Shortage of factors of production or inputs: Shortage of factors of production, i.e. raw material, labour capital etc causes the reduced production, which causes the increase in prices. 2- Industrial Disputes: When industrial disputes come to happen, i.e. trade unions resort strikes or employers decide lock outs etc the industrial production reduces. And as a short supply of goods in the market the prices go up. 3- Natural Calamities: Natural disasters, invasions, diseases etc effect the agricultural production, and shortage of supply which furthers the rise in prices. 4- Artificial Scarcities: Hoarders, black marketers and speculators etc create artificial shortage to earn more profits by keeping the prices high. (in Pakistan bird flu dilemma and sugar crises are the major examples in this regard) 5- Increase in exports (excess exports): When the country has tends to earn maximum foreign exchange and exports more and more without considering the domestic use of the commodities, it creates a shortage of commodities at home which increases the prices. (With reference to Pakistan, the failure of export bonus scheme during 1950's is the most common example of this type of cause of inflation) 6- Global factors: This factor includes the changing global environment. Most common example is the rise in oil prices. This factor of inflation may vary in nature, i.e. it can be political, strategic, economic or logistic in nature. 7- Neglecting the production of consumer goods: When the production of consumer goods is neglected with reference to the increased production of luxuries, it also creates inflation. For example in Pakistan, in last couple of years our services sector has grown with the highest rate of 8.8% (mainly telecom sector), while basic necessities have been ignored which created increase in the prices of consumer goods. 8- Application of law of diminishing returns: this law applies when the industries use old machines and methods and, which increase in cost by increasing the scale of production. This furthers the increase in prices and hence inflation bursts out.

Identify the common errors in economic thinking?

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1-The post hoc fallacy

The 1st fallacy involves the inference of causality. The post hoc fallacy occurs when we assume that, because one event occurred before another event, the 1st event caused the 2nd event.

2- Failure to hold other things constant

3- The fallacy of composition

Five factors aiding the booming growth of corporations included?

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The five factors that encourage industrial growth include improved transportation, modern machinery, and improved communication. Two other factors are assembly line production and better production methods with modern technology.

What is the disadvantage in free trade?

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Free trade is a double-edged sword. On the surface it appears as equal opportunity for everyone in the pact. While it has some advantages, it also carries some disadvantages. The extent of disadvantages for any country in the free trade zone is directly related to the attained level of technology for that country. This means that less industrialized members of a free trade region may be at a disadvantage until such countries overcome their technological obstacles.

What were Manuel Roxas' economic policies?

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way of life of filipino's during the 3rd republic of the phil.

What are the effects will the US recession have on other country?

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Of course it doesyer mom lol jokin. The world economy is interconnected on many levels. For instance, you may have noticed the huge jump in gas prices for a time during 2008. While there were many factors involved in this, one major one was that oil is traded in US Dollars. As the value of the USD falls, the amount of oil that $1 purchases decreases (thus increasing the price of oil). While most easily noted in countries that trade goods in the USD, the price of oil is a huge factor in the cost of moving goods around the world. If it costs more to move goods, naturally the goods cost more when they arrive.

This is a meager example of one minor facet of world economy at work. There is, without a doubt, a nearly infinite number of other examples that could be given, but I will let wiser economists than I try to give you a better explanation. However, the direct answer to your question is yes, a failing economy in the US (or any major trade nation) has a ripple effect throughout the world.

When recession will finish?

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The governments world wide have been taking frantic steps to control the effects of this recession. The US government has sanctioned billions of dollars to help the economy. Similarly nations like UK, India etc are also taking steps to tide over the problem.

Currently the economic situation around the world seems to be improving and we can expect things to stabilize and become normal by the end of the year 2009.Still we have to fight.