Develop an essay discussing the fiscal and monetary policies

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Reference no: EM133567720

Assignment: Demand-Side Policies & 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 that a minimum of 1500 words for your essay is required.

Your paper should be structured as follows

I. Cover page with a running head

II. Introduction: What is the economic meaning of a recession?

i. A brief discussion of fiscal policies
ii. A brief discussion of monetary policies

III. 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

IV. References: Include in your essay analyzing the advantages and disadvantages of deficit spending and the effects of federal government borrowing on the economy i.e., the "crowding out" effect.

Reference no: EM133567720

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