The global economies were forced to employ fiscal and monetary policies in order to ensure that the economies were shielded from the effects of the recession (Orr, 2010).
The magnitudes and types of fiscal and monetary policies varied depending on the regions and specific economies as well as the impact of the crisis on the economy. Regions which were hard hit required huge financial bailouts coupled with restricting of the economic elements while those affected indirectly only employed regular fiscal and monetary policies.
According to Wildcat Publishing (2010), global recessions involving the US sing 1970s to the recent crisis in 2008 have been closely linked to spikes in oil prices. Rising oil prices have culminated in the propagation of recessions originating from reduction in demand and productivity owing to the reliance of oil in most activities by households and companies. In 2008, oil prices topped US$145 per barrel, with the most significant part of the rise occurring due to speculation as opposed to economic growth and expansion in productivity and demand (ESCWA, 2009). However, this price spike was unsustainable owing to the plunging of the demand from the OECD which makes the world largest demand pool for oil products. On the other hand, the OPEC instituted cuts in output to ensure that further drops in the price levels were curtailed. The reduction in productive capacity of the developed countries was directly attributable to the increase in oil prices, with the demand set to decline by close to 5% in bothNorth AmericaandEurope.
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