--%>
Assignment Help - homework help

Crisis in Japan & US

Question:

What can we learn from the Japanese experience? Is the US headed for a 'lost decade?

Answer:

There was a similarity in the way the economies of Japan and US went into the crisis: it started from the real estate bubble burst which was caused by sub-prime lending. It was the lack of aggregate demand which caused the major trouble, along with contractionary conditions. The investment rate was low and liquidity trap existed. However, the case of US is not the same. US responded to the downturn almost immediately and the recover, though slow is already on way. The most important aspect is that unlike Japan, the US financial and banking structure is more transparent and regulated, at least now, than the erstwhile Japanese counterpart. The US has also made many efforts to help the panicked credit markets than Japan. So, it does not seem that US will experience a "lost decade".

 

   Related Questions in Macroeconomics

  • Q : Computing Fiscal deficit In government

    In government budget, primary deficit is Rs. 10,000 crores and interest payment is Rs. 8,000 crores. Compute the fiscal deficit?

    		•
  • Q : Formula for Fiscal deficit Fiscal

    Fiscal deficit: Fiscal deficit is stated as the surplus of total expenditure over total receipts, apart from borrowings. Fiscal deficit = Total expenditure (Rev. Exp. + Cap. Exp.) – Total Receipts

  • Q : Illustration of arbitrage The

    The illustration of arbitrage takes place when: (1) Enterprising students purchase used textbooks much cheaply on E-Bay and sell them to another students at lower prices than bookstore charges. (2) Ivan purchases a stock when it is cheap and sells it

    		•
  • Q : Calculating Trade balance Suppose the

    Suppose the value of exports of goods of a country is Rs. 1,000 crores and the value of imports of goods is Rs. 1,200 crores, what will be the trade balance (or balance of trade)?

    		•
  • Q : Inflation Inflation is frequently

    Inflation is frequently described as "too much money chasing too few goods." Is this a satisfactory definition?

    		•
  • Q : Sources of demand for foreign currency

    State main sources of demand for foreign currency? Answer: The four main sources of demand for foreign currency are as follows: A) To buy services and goods from other countries. B) To send a gift abroad.

  • Q : Components of aggregate demand What are

    What are the components of aggregate demand (AD)? Answer: The components of AD are as follows:AD = C + I + G + (X - M) By Simplifying AD = C + I, Here C refers to Household consumption demand and I refer

    		•
  • Q : Principles of macroeconomics What are

    What are the “powers of the Federal Reserve

    		•
  • Q : Define involuntary unemployment

    Involuntary unemployment: Involuntary unemployment terms to a condition in which people that are willing to work are unable to obtain work.

    		•
  • Q : Fiscal and Monetary policies How can

    How can governments seek to control their national economies through fiscal and monetary policies?

    		•