Majanduskrahh

Majanduskrahh, or economic crash, refers to a sudden and significant decline in economic activity. This can manifest in various ways, including a sharp drop in stock market values, widespread business failures, and a rapid increase in unemployment. Economic crashes often have far-reaching consequences, impacting individuals, businesses, and entire nations.

The causes of economic crashes are complex and can include a combination of factors such as speculative bubbles bursting, excessive debt accumulation, and financial system instability. Government policies, global events, and shifts in consumer or investor confidence can also play a role. When a crash occurs, it can lead to a recession or even a depression, characterized by prolonged periods of economic hardship.

During an economic crash, financial markets typically experience sharp sell-offs as investors panic and attempt to liquidate their assets. This can further exacerbate the downturn. Businesses may face liquidity problems, leading to layoffs and reduced investment. Consumers often cut back on spending due to uncertainty and job losses, creating a negative feedback loop.

Governments and central banks often intervene during economic crashes to try and mitigate their effects. These interventions can include lowering interest rates, providing liquidity to financial institutions, and implementing fiscal stimulus measures. The effectiveness of these measures can vary, and the recovery process can be lengthy and challenging. The term "majanduskrahh" is used in Estonian to describe such severe economic downturns.