AMU Week 7 Free Market Economy Essay

User Generated

wunzvygba12

Economics

American Military University

Description

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


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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.

Running head: RECESSION FISCAL AND MONETARY POLICIES

RECESSION FISCAL AND MONETARY POLICIES

Name

Department Name, Institute Name

Subject Name

Professor Name

Date

1

RECESSION FISCAL AND MONETARY POLICIES
2

Introduction
Unemployment decreases in real GDP, earnings, unemployment, and factory output were
the signs of a downturn. Wholesale, retail sales were also down significantly during a downturn.
When the economy hits its peak, a downturn starts, and it ends when it reaches its low.
Currently, the industry is showing growth as we go from the bottom of the cycle to its top. An
economic downturn is referred to as a depression when there is a considerable reduction in the
overall level of commercial activity in a particular area. It was often seen as a decrease in the
economy over two consecutive months, measured by GDP and monthly indications like
employment increases. (Whitmore, 2016) Many academics were taken aback by the profession's
quick and unambiguous support for fiscal activism during the Global Recession. Indeed, most
professionals have been sceptical about fiscal policy efficacy since the late 1970s. After all t...


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