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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