Briefly sketch the plot of a disaster movie in which an electromagnetic pulse caused the shutdown of all electronic equipment causing financial activity to grind to a halt.
Using what you have learning during the course, the text readings, and scholarly resources, describe the effects of such an event on financial institutions and the macroeconomy.
At a minimum, include the following in your paper:
- Details regarding the functions of money which would be missed immediately.
- What are some of the immediate effects of financial institutions shutting down? For example:
- the price of goods (inflation),
- unemployment in the various financial institutions,
- lack of a functioning central bank (who clears checks?),
- demand for paper money now that debit cards don't work,
- interest rates,
- demand for gold,
- barter.
- Focusing on the financial system, what emergency measures might be invoked to keep the economy running?
- What financial institutions would need to be the first to come back "online."