The economic and financial crisis of 2008-2009 represents the most serious economic downturn in the U.S....

The economic and financial crisis of 2008-2009 represents the most serious economic downturn in the U.S. and the world since 1929. Review and discuss the Federal Reserve and its role in our economy during this time including a discussion of our nation's three main economic goals. Describe the historic monetary and fiscal policy efforts undertaken by the U.S. Government and Federal Reserve including both the traditional and non-traditional measures to ease credit markets and stimulate the economy.

Expert Solution

Financial crisis of 2008-09 was characterised by the fall in the aggregate demand significantly. it led to the fall in the investment and consumption expenditure as well. Thus output declined and unemployments rate increased.

Like a 1929, it was required for the Government to make an intervention in the economic activities. Unlike 1929 when role of Federal reserve was minimum, Fed role in addressing the crisis of 2008 is well documented. Through several measures, Fed increased money supply and attempted to reduce the interest rate. Following are goals of monetary and fiscal policies:

Price stability
Full employment.
Reducing the economic hardships and maintaining trade balances.

These objectives were pursued through the monetary and fiscal policies. Government announced serious of stimulus packages. Fed resorted to quantitative easing and driven up the demand massively. Both policies were used in consonance to produce the most desirable outcomes. Presently, in the face of COVID-19 pandemic, once again we are in the brink of new economic depression, we need once again the expansionary fiscal and monetary policies.

Rahul Sunny answered 6 months ago

The economic and financial crisis of 2008-2009 represents the most serious economic downturn in the U.S....

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The economic and financial crisis of 2008-2009 represents the most serious economic downturn in the U.S....

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