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.
discuss 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 in a Microsoft Word , and in APA format. Note your submission will automatically be submitted through “TurnItIn” for plagiarism review. Please note that a minimum of 700 words is required.
IT 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 2008 Great Recession
Macroeconomic analysis addresses the critical issue of government intervention in the operation of a “free market economy.” According to the Keynesian model, it is the government’s responsibility to assist in the stabilization of the economy. The federal government implements stabilization policies (demand-side and supply-side policies) to counteract business cycle fluctuations and prevent high rates of unemployment and inflation. Demand side policies are government efforts to influence aggregate demand (AD) through fiscal (tax cuts and increased government spending) or monetary policy (reducing interest rates). To shift the AD to the right, the government must increase government spending (the G-component of AD), which increases consumer spending (the C-component of AD). Alternatively, the Federal Government