Module 3: Globalization of World Economics (Part 2)

Oil Embargo

In early 1970s, the ______ by OAPEC and the crashed of the stock markets affected the Western economies.

Organization of Arab Petroleum Exporting Countries

What is OAPEC?

Inflation

Increase in prices.

Stagnation

Decline in economic growth and employment

Stagflation

The result was phenomenon that Keynesian economics could not have predicted in which there is a decline in economic growth and employment takes place alongside a sharp increase in prices.

Neoliberalism

Emerged as a new form of economic thinking.

Friedrich Hayek
Milton Friedman

Economists that challenged the Keynesian theory and argued that government intervention in economies distort the proper functioning of the market.

Washington Consensus

The policies forwarded came to be called _______.

Minimal government spending

The Washington consensus advocates for __________ to reduce government debt.

Privatization of government-controlled

They also called for the ________ services like water, power, communications and transport, believing that the free market can produce the best result.

Ronald Reagan

Its advocates like US President _______ and British Prime Minister Margaret Thatcher justified reduction of government spending by comparing national economies to households

Margaret Thatcher

Its advocates like US President Ronald Reagan and British Prime Minister ________ justified reduction of government spending by comparing national economies to households

2007-2008

Neoliberalism came under significant strain during the global financial crisis in ______ when the world experienced the greatest economic downturn since the great depression.

1980s

The crisis can be traced back to the ____ when the United State systematically removed various banking and investment restrictions.

Financial Experts

They wrongly assumed that even if many of the borrowers were individuals and families who would struggle to pay, a majority would not default.

Beyond the United States

The crisis spread _______ since many investors were foreign governments, corporations and individuals. The loss of their money spread like wildfire back to their countries.

Spain
Greece

The challenges are countries like ____ and ____ are heavily indebted (almost like Third World countries).

Social
Public Spending

Greece has been forced by Germany and the IMF to cut back their _____ and _______.

Down Growth

The reduction in government spending has showed _____ and ensured high levels of unemployment.

Political upheaval

In Europe, the continuing economic crisis has sparked a ________.