Question: a. What event sent the worlds stock prices down on September 8, 2011? b. What feature of the financial markets translated the event into a

a. What event sent the world’s stock prices down on September 8, 2011?
b. What feature of the financial markets translated the event into a stock price fall?
c. How did the global loanable funds market respond to daily shocks over the whole of 2010–2011?
d. How would you explain the stark difference in the performance of the global loanable funds market and the market for Greek government debt?
e. Why would Germany and France want to prevent a Greek government default?
f. If Greece did default, what do you think would happen in the global loanable funds market?
g. Illustrate your answer to part (f) with an appropriate graphical analysis of the global loanable funds market.

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a A top European central banker resigned b Stock prices fell because of fears that Greece might default Bond and stock markets are interlinked in the ... View full answer

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