trillion! This is a staggering result, and it affected millions of lives: people had to alter their retirement, housing, and

other important consumption decisions. Just about every other large economy in the world suffered a decline in the

market value of financial assets, as a result of the 2008-2009 global financial crisis.

This chapter will explain why people purchase houses (other than as a place to live), why they buy other types of
408 17 • Financial Markets

financial assets, and why businesses sell those financial assets in the first place. The chapter will also give us insight

into why financial markets and assets go through boom and bust cycles like the one we described here.

When a firm needs to buy new equipment or build a new facility, it often must go to the financial market to

raise funds. Usually firms will add capacity during an economic expansion when profits are on the rise and
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