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The Effect of the Financial Crisis on Greece

In: Business and Management

Submitted By hassanemara8
Words 2174
Pages 9
Abstract

The following paper offers a research, which raises a question. To what extent, has the Greek economy suffered as a result of the economic breakdown? Over the past decade, the Greek government has been relying heavily on foreign aid and the reliance on financing from international capital markets resulted to an accumulation in national debt. The interference of fiscal policy by the injection of money in the economy and the increase of money supply and the encouragement of consumption has been a huge factor in contributing to the overall outcome.

I. Introduction
According to many economists, the financial crisis of the late 2000s is considered to be the most severe financial crisis since the great depression of the 1930s. A downfall in the United States banking system was the trigger behind the formation of the crisis, which resulted in the breakdown of large financial institutions. The government was forced to bailout banks as a result and similarly the stock market faced a huge blow, not only in the United States but all around the entire globe.

Well into 2006, the United States housing bubble flopped, resulting in the decrease in the values of securities causing the real estate pricing to vastly decline, which similarly resulted in the collapse of huge financial institutions all around the world. Foreign direct investment suffered a huge blow as damaged investor confidence and the decline in credit and security availability have contributed to the major collapse of the stock market.

The United States is considered to have an economy that acts as a liaison in the global market, which as a result affects all economies around the world. Investors and credit related agencies failed to accurately calculate the risk involved with mortgage related products, therefore the U.S government decided to use both fiscal and monetary policy to pump money

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