Understanding the 2008 Financial Crisis: Causes, Impacts, and Policy Responses

The video explains the causes and impacts of the 2008 financial crisis, focusing on the US subprime mortgage market and its global repercussions. It discusses the UK policy responses, including the lender of last resort, monetary policy adjustments like QE, and fiscal measures such as austerity. The crisis led to a global economic downturn, affecting consumption, unemployment, and government debt.

What was the primary factor that led to the 2008 financial crisis?

• The collapse of the tech industry

• A global oil shortage

• The rise of cryptocurrency

• The US subprime mortgage market

How did the creation of CDOs contribute to the financial crisis?

• They were transparent and well-regulated

• They were only used by small banks

• They were complex and opaque, leading to risky investments

• They were easy to understand and manage

What was one of the immediate effects of the financial crisis on the global economy?

• A significant increase in global trade

• A sharp decline in consumption and investment

• A decrease in unemployment rates

• A dramatic rise in economic growth

Which policy response involved the UK government providing liquidity assistance to banks?

• Monetary policy response

• Tax policy reform

• Fiscal policy response

• Lender of last resort function

What was a key feature of the UK's fiscal policy response to the financial crisis?

• Implementing austerity measures

• Increasing interest rates

• Reducing taxes for corporations

• Nationalizing all banks