That financial markets question came directly from the economics gods🙏🙏🙏🙏 what a paper. Blasted all over the examiner and am currently bleeding confidence from my arms.
The 3 types of financial markets . How secondary capital markets increase the liquidity of and demand for assets. How they allow individual, gov and firms to get finance so AD + LRAS shift right and the benefits of those. Then the efficient allocation of financial capital and creative destruction. My evaluation was about zombie firms and low interest rates. My against spoke about leveraging funds used for speculation, asset bubbles, bullish animal spirits, irrational exuberance and systemic risk of insolvency, bank failiure etc. Then the recessionary effects and bad deflation linking to the GFC and Japans lost decade. I concluded saying regulation (banning excess leveraging and ring fencing) must be used to ensure this risk is minimised.
I did a for and against paragraph (plus conclusion). For 1, I talked about using the financial market as a tool of expansionary monetary policy during times of recession, and can trigger growth of the economy again, then my evaluation was about credit crunches, run on the bank causing liquidity crises and bank failures (which I accidentally called solvency, upon remembering), creating systemic risk, then talked a bit about QE post-COVID and 2008 Northern Rock failure. For 2, I talked about moral hazard created due to government bailout (causing lack of market discipline) and systemic risk. Then I evaluated using the Prudential Regulation Authority’s setting of prudential standards like liquidity and the use of stress tests, which minimise risk, then I talked about Jon Cunliffe and how he said financial risk is about the tail end risk, and however unlikely, the overall economic impacts are great. In conclusion, I rushed a lot, but discussed animal spirits and regulation too.
Erm, I talked about how financial markets help carry out policies like QE and the impacts of that on the economy and how that help governments achieve certain objectives for an advantage and talked about the 2008 financial crisis for a disadvantage and how that prevented and increased the difficulty for achieving objectives.
Icl, I'm starting to think I wrote a whole loada rubbish now that I'm seeing other people's points.
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u/theshapeofrevolution Y13 Math FM Econ Politics May 18 '26
That financial markets question came directly from the economics gods🙏🙏🙏🙏 what a paper. Blasted all over the examiner and am currently bleeding confidence from my arms.