In 2009, American Recovery and Reinvestment Act provided for roughly $800 billion in government spending (most...

In 2009, American Recovery and Reinvestment Act provided for roughly $800 billion in government spending (most of it) and tax cuts (less) to jumpstart the economy. Do you think this was the correct approach? Cite three reasons why or why not. Would your opinion change if you were in the auto industry at the time?

Expert Solution

The American recovery and Reinvestment act was signed by president Obama in 2009 and ended the great recession. This was passed to boost the american economy, households and small businesses.

Considering the situation back then and the credit crises of 2008 this was one of the correct or good approach to get the economy back on track, some of the benefits here included:

a. Immediate relief to families through reduction of withholding taxes

b. Increased Alternative Energy Production that eventually boosted the industry

c. Expanded and Provided subsidised health care

d. Helped Small businesses grow by providing many benefits and tax cuts

As every coin has two sides there were also certain issues here:

a. The Act was quite complicated and people were unsure if they received any tax breaks or no

b. Small businesses were not receiving any orders inspite of any tax deductions and loan guarantees

c. The extended benefits did not drive people to look for work

Considering the benefits cited probably my opinion would not change at that time since the entire relief was quite promising.

Rahul Sunny answered 2 years ago

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