paper 1.docx - 1 Describe How The Financial Environment Has Changed During The Past Few Years During the past few years the financial environment has

paper 1.docx - 1 Describe How The Financial Environment Has...

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1. Describe How The Financial Environment Has Changed During The Past Few Years. During the past few years, the financial environment has not been on its best feet. The early twenty-first century has been characterized by economic and financial markets volatility along with many individuals “treading water” in trying to maintain the standards of living they had achieved. From the year 2000, there was a technology stock price bubble burst and an economic downturn was followed by the September 11 th 2001 terrorist attack. A period of economic recovery occurred until the housing price bubble burst in 2006. In 2007to 2008, there was a financial crisis, which was led by falling housing prices and falling value of home mortgages and further led to the Great Recession in 2008 to 2009. In this recession, economic activity took longer to recover and unemployment remained at high levels at the end of the first decade. 2. Describe How The Financial Environment Has Changed During The Past Few Years. A number of negative economic and financial trends and events contributed to the development of the financial crisis of 2007 to 2008. A rapid decline in housing prices caused a credit crunch which successively contributed to the high employment and a major decline in economic activity. The development occurred when individuals, financial institution and businesses were heavily in debt. The result was a so called “perfect financial system” accompanied by a fear that a financial system may collapse. Nevertheless, some disagreement continues as to the specific causes of the financial crisis, where most economists and other individuals trace the beginning of the crisis to the bubble bursting.
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