Question

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1. How does the Great Recession compare with the Great Depression in terms of severity? Provide a detailed explanation in at least a paragraph.

2. How have Federal Reserve policies implemented during the Great Recession differed from those implemented during the Great Depression?

Provide a detailed explanation in at least a paragraph.

Answer 1

In U.S. the Great Recession of 2007-2009 was the steepest recession in the country since the Great Depression that occurred from August 1929 to March 1933 (3 years and 7 months). The main differences among the Great Depression and the 2008 US Recession are discussed as below:

--A stock market crash led to a reduction in expected income and tight monetary policy. Higher rates of taxation and a crisis in banking sector drove U.S. economy into a depression, and these summarize the main factors for the Great Depression. On contrast the fall in the housing prices and stock prices, along with the financial crisis, summarizes the main factors for the Great Recession.

--The significant difference between the Great Recession and the Great Depression is that the American government reduced taxes during the Great Recession in 2008 however it raised them during the Great Depression

--During the 1930's Great Depression, the real GDP of U.S. fell by nearly 27 percent, in comparison to the 3.7 percent fall during the Great Recession in 2008.