Market government Article Example | Topics and Well Written Essays - 1750 words

Market government - Article Example However the generally accepted view points out to the housing bubble to be the prime reason. It all started with the collapse of Lehman Brothers and quickly penetrated into the market causing turbulence and system crash. This recession did not take place as a result of a business cycle that generally affects each and every economy. A number of reasons underlie this particular case of financial crisis including that of the shocks arising in the general business cycles which has been instrumental in disrupting the labor market equilibrium in the United States. The entire issue of the financial crisis is to be reviewed from all the angles of economics including the neoclassical, mixed liberal and the radical points of view to have a perspective of the entire event. This paper will enlighten the various perspectives put forward by the different schools of thoughts and accordingly place their views in the following paragraphs. The Neo Classical economists base their theories on the microeconomic principles which include the optimization of the individuals and firms and to determine the equilibrium price and output in the economy using the market forces of demand and supply. The theory considers that the people make rational decisions based on the information that they have about the market. The neoclassical economists explain the fluctuations in the economies as a result of the upturn of the business cycles in the economy (Blanchard, 2000). The economic variables that generally behave in a particular fashion in order to result in a recession have behaved in a most unusual manner in case of this particular financial crisis. The level of consumption, output investment as well as the employment of labor was much low. By analysis of the economic variables it was found that the crisis of the present period is much more severe compared to that of the Great Depression of 1937 or any other recessions that have ta ken place in the world. The drop in the level of