Assignment 2: Demand-side Policies and the Great Recession of 2008
Macroeconomic analysis deals with the crucial issue of government involvement in the operation of "free market economy." The Keynesian model suggests that it is the responsibility of the government to help to stabilize the economy. Stabilization policies (demand-side and supply-side policies) are undertaken by the federal government to counteract business cycle fluctuations and prevent high rates of unemployment and inflation. Demand side policies are government attempts to alter aggregate demand (AD) through using fiscal (cutting taxes and increasing government spending) or monetary policy (reducing interest rates). To shift the AD to the right, the government has to increase the government spending (the G-component of AD) causing consumer expenditures (the C-component of AD) to increase. Alternatively the Federal Reserve could cut interest rates reducing the cost of borrowing thereby encouraging consumer spending and investment borrowing. Both policies will lead to an increase in AD.
Develop an essay discussing the fiscal and the monetary policies adopted and implemented by the federal during the Great Recession and their impacts on the U.S. economy.Complete this essay in a Microsoft Word document, and in APA format. Note your submission will automatically be submitted through "TurnItIn" for plagiarism review. Please note that a minimum of 700 words for your essay is required.
Your paper should be structured as follows
1. Cover page with a running head
2. Introduction: What is the economic meaning of a recession?
A brief discussion of fiscal policies
A brief discussion of monetary policies
3. Conclusions: Discuss the extent to which the use of demand side policies (fiscal policy and monetary policy) during the Great Recession of 2008 has been successful in restoring economic growth and reducing unemployment
Demand-Side Policies and the Great Recession Of 2008
Economic meaning of the recession
Recession refers to the duration characterized by the decline in the economy of a nation. Recession results from the increased rates of unemployment, the reduction in the markets of houses, and the decline in the stock market. The leadership of federal includes the President, Federal Reserve, along with the central administration. Moreover, recessions in any place result due to the wide range of factors. These factors include increased cases of inflation, increased rates of interest, the decline in consumer confidence, and a decline in wages. Therefore, addressing cases of the recession need adoption of economic policies that facilitates the enhancement of the economy. According to a report by Ohanian (2014), U.S government authority focused on case