Quickest Way to Re-inflate Economy Term Paper Example | Topics and Well Written Essays - 750 words

Quickest Way to Re-inflate Economy - Term Paper Example In order to manage the crisis, the central banks across the world had little funds in their treasury to re-stabilize the economy. Â  The central banks embraced huge amount of bad debts while the monetary reserves of the central banks hit the lowest values. Due to the slowdown of the business environment in the economies like the UK, US, Ireland, Canada, Austria, Greece, etc. the amount of goods and services produced by the business decreased. This led to the large number of job cuts and the unemployment level grew beyond the normal limits. The lowering of employment reached around 10% which meant that the income level of the households lowered. The situation led to the liquidity crunch in the economies and there was little money to be spent for purchase of goods and service. The decrease in demand in the economy due to the loss of purchasing power further slowed down the business activities and the investments. Due to this reasons, the economies plunged downwards with the cyclic dec line of demand as well as the business growth. The central banks had to find ways in order to fuel the economic growth of their country. This led to shift of the focus of the central banks towards the fiscal policies in order to stage an economic turnaround. The governments and the central banks have looked for ways that would offer the quickest mode of re-inflating the economy and stage an economic recovery. This resulted in the discussion of the economic fundamentals and the parameters that are responsible for the economic growth of the country. It has to be kept in mind that economic growth could be obtained in the fastest mode through the generation of demand. The demand-driven economies have experienced rapid growth rates in the past decades which include the US, UK, China, India, Brazil, Kazakhstan, etc. Thus the Federal Reserve and other central banks all over the world focused on regenerating the economic demands.