Question

In: Economics

Examine the monetary policies in place at the start the 2008-2018 period in relation to their...

Examine the monetary policies in place at the start the 2008-2018 period in relation to their effects on macroeconomic issues. For instance, consider the discount rate set by the Fed, the rates on reserves, open market operations, and so on. 

Analyze new monetary policy actions undertaken by the U.S. government throughout the time period by describing their intended effects, using macroeconomic principles to explain the actions. 

Explain the impact of the new monetary policy actions on individuals and businesses within the economy by integrating the macroeconomic data and principles.

Solutions

Expert Solution

2008 saw a recession started due to subprime crisis in USA. This led to many financial companies going down. US economic recessionary impacted world economy and overall growth rates were affected.

Federal reserve had to pitch in to correct economy. Govt. gave bailout packages to many financial firms through expansionary fiscal policies. Federal reserve reduced interest rates to increase consumption in an economy as a part of expansionary monetary policy. Since then interest rates have been very low. Federal reserve had low reserve rates and also low discount rates.Through open market operations they bought many govt. bonds to increase liquidity in the market. This policy worked well and US economy is finding ways to grow. In 2018, unemployment decreased and economic growth rates also went up.

This intervention by govt. and federal reserve can be explained through Keynes perspective. Keynes believed that when economy is in recession, govt. investments can shift aggregate demand to right without increasing price levels as economy has 'spare capacity' in the form of unemployed resources that are used by businesses. As shown in fig. below, AD1 with real GDP of Ye will shift to right without price levels changing till it reaches to Yp. This has been observed to be true in US economy as reduced interest rates and govt. bailouts increased business and consumer confidence and AD shifted right.

However, this has increased USA govt. debt manyfold and USA needs to be careful in future.


Related Solutions

During the time period of 2008-2018 Examine the fiscal policies in place at the start of...
During the time period of 2008-2018 Examine the fiscal policies in place at the start of your specific time period in relation to their effects on macroeconomic issues. For instance, consider level of government spending, taxation, subsidies, unemployment benefits, and so on. Analyze new fiscal policy actions undertaken by the U.S. government throughout the time period by describing their intended effects, using macroeconomic principles to explain the actions. Explain the impact of the new fiscal policy actions on individuals and...
Examine the fiscal policies in place at the start 2008 in relation to their effects on...
Examine the fiscal policies in place at the start 2008 in relation to their effects on macroeconomic issues. For instance, consider level of government spending, taxation, subsidies, unemployment benefits, and so on. Analyze new fiscal policy actions undertaken by the U.S. government throughout the time period by describing their intended effects, using macroeconomic principles to explain the actions.  Explain the impact of the new fiscal policy actions on individuals and businesses within the economy by integrating the macroeconomic data...
Examination of the monetary policies in place at the start of the 2007-2017 period in relation...
Examination of the monetary policies in place at the start of the 2007-2017 period in relation to their effects on macroeconomic issues. In other words, Can you briefly describe the monetary policy of the period leading into the decade (i.e., prior to 2007). Was it expansionary or contractionary? What specific monetary policy actions were undertaken during the 2007-2017 period. Were interest rates raised or lowered during the 2007-2017 period? Did the Fed use other instruments, including open market operations and...
i. Examine the monetary policies in place at the start of your specific time period in...
i. Examine the monetary policies in place at the start of your specific time period in relation to their effects on macroeconomic issues. For instance, consider the discount rate set by the Fed, the rates on reserves, open market operations, and so on for 2000-2010.
What are the monetary policies in place at the start of the selected time period in...
What are the monetary policies in place at the start of the selected time period in relation to their effects on macroeconomic issues in 2000-2010?
i. Examine the fiscal policies in place at the start of your specific time period in...
i. Examine the fiscal policies in place at the start of your specific time period in relation to their effects on macroeconomic issues. For instance, consider level of government spending, taxation, subsidies, unemployment benefits, and so on from 2000-2010.
Summarize the monetary policies the Fed implemented during the financial crises of 2008. Analysis of the...
Summarize the monetary policies the Fed implemented during the financial crises of 2008. Analysis of the impact on the interest rate, inflation rate, unemployment rate, and economic growth. At least 500 words.thank you very much
I need to know about specific monetary policies in place in the beginning of the 1980s....
I need to know about specific monetary policies in place in the beginning of the 1980s. The instructor told us to remember that the Federal Reserve controls our monetary policy and they have a four main goals: 1. Price Stability 2. High Employment 3. Economic Growth 4. Financial Market Stability. So I need to know specific monetary policies used in that time period and what the goals were of those policies. (I need at least two policies). I already know...
1. During the 2008–2009 period, the conventional monetary policy response was to _____ interest rates, while...
1. During the 2008–2009 period, the conventional monetary policy response was to _____ interest rates, while the conventional fiscal policy response was to _____ taxes and to _____ government spending. decrease; decrease; increase increase; increase; increase increase; increase; decrease decrease; decrease; decrease 2. If the government levies a one-time temporary tax on the young and gives the proceeds to the elderly, and both generations follow the life-cycle consumption pattern but are not altruistically linked: there will be a net increase...
explain/examine how both governments’ cash rate (monetary), expenditure and tax (fiscal) policies were used to impact...
explain/examine how both governments’ cash rate (monetary), expenditure and tax (fiscal) policies were used to impact economic outcomes and manage the GFC
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT