Answer to Question #258345 in Finance for Danu

Question

Using examples point out the risk that led to the global financial crisis of 2008

and suggest how we can prevent recurrence of the same in the future (10marks)

Answer 1

The stock market experienced a crash in 2008. GDP fell by 0.3%. Though the crisis had started as earlier as October 2006. The order for durable goods and a decline for house production were experienced since 2005.

To counter the recession the Congress passed Troubled Assets Relief Program which allowed the U.S Treasury to lent $115 million to banks. The purpose was to prevent national and global economic crisis