Lalala

1) In the 1980s, Japan was viewed as one of the world’s most dynamic economies. Today, it is viewed as one of its most stagnant. Why has the Japanese economy stagnated?

The Japanese bank over lent which financed much on asset with easy money causing their balance sheets loaded with bad debt. At the same time, difficulty of replace the money borrowed will make deficit that causing the deflation in the country. “The Nikkei Stock Average hit a record high on 38916 on December 1989 before the bubble burst” (Hongo, 2014) and stood at 9600 in early 2012 and Japan has been gripped by deflation for the best part of two decades.

To summarize deflation where the prices are falling, reduction of employment, banks curtailed the easy lending practices to create the economic boom, property prices dropped and the Japanese government was unsuccessful.

2) What lesson does the history of over the past 20 years hold for nation? What can countries do to avoid the kind of deflationary spiral that has dripped Japan?

The others nations can learn from Japan Malaise issues. Due to the over lent and too much financing on asset price with easy money, Japanese create high amount of bad debt. It leads the economic to the recession. Government should watch its spending to ensure their nations’ economic are balance. Whenever reduction of spending from consumer happened, its means that price falling situation created where consumers and businesses expect price will be lower on tomorrow. When there are no exchange or business transactions within a country, it will reduce the economic growth of a nation. What had happened to Japan is stuck on its economic growth because of its debt is too high.

3) What do you think would be required to get the Japanese economy moving again?

Lower in interest rate and taxes can motivate consumer to do more spending rather than keeping their money and afraid for spending their money. The situation of price falling leads consumers to expect prices will be lower on...