Essay: Credit Expansion lead to Irrational Economic Decision

17 Oct

Essay: Credit Expansion lead to Irrational Economic Decision

Sample Essay

Credit expansion without control results to irrational economic decisions since people invest without carrying out sufficient market analysis and when their economic bubble bursts, many firms get bankrupt.

To begin with, the speculative mania begins to invest in primary goods and assets such as goods mean for export, foreign and domestic security and assets of all kinds. However, in the late stages of uncontrolled credit by the speculative mania, they result to delusive assets. Different financial crisis differ from one another in references to their causes and occur in different times. Financial crisis also differ depending on whether they affect an economy or they affect the global economy. The main problem with traditional supply and demand analysis for analyzing financial cycles is that there is not possible to have all data from individual players in the market since the world has become a global village.

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