Starting in 2008, the United States experienced the greatest economic calamity since the Great Depression. To combat rising unemployment, negative economic growth, and deflation, among other problems, the U.S. government employed instruments/policies from both the fiscal and monetary toolkits. Write an essay 1,250-1500 words regarding the impact of economic policy on the market. Address the following:
- Describe the major problems of the “Great Recession.” What required immediate government action, from the perspective of many public officials?
- Monetary policy: Describe how the Federal Reserve respond to the crisis. Be sure to discuss interest rates and open market operations.
- Fiscal policy: Describe Congress’s response to the crisis. Be sure to discuss the American Recovery and Reinvestment Act of 2009.
- Explain the goals of the fiscal and monetary policies employed. Address “stimulating aggregate demand” and the role of “increasing the money supply” in your response.
- Evaluate the success in the policies.