Demand-side Policies and the Great Recession of 2008

Macroeconomic analysis deals with the crucial issue of government involvement in the operation of “freemarket economy.” The Keynesian model suggests that it is the responsibility of the government to help tostabilize the economy. Stabilization policies (demand-side and supply-side policies) are undertaken by thefederal government to counteract business cycle fluctuations and prevent high rates of unemployment andinflation. 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 theAD to the right, the government has to increase the government spending (the G-component of AD) causingconsumer expenditures (the C-component of AD) to increase. Alternatively the Federal Reserve could cutinterest rates reducing the cost of borrowing thereby encouraging consumer spending and investmentborrowing. Both policies will lead to an increase in AD.Develop an essay discussing the fiscal and the monetary policies adopted and implemented by the federalduring the Great Recession and their impacts on the U.S. economy.Complete this essay in a Microsoft Worddocument, and in APA format. Note your submission will automatically be submitted through “TurnItIn” forplagiarism review. Please note that a minimum of 700 words for your essay is required.Your paper should be structured as follows

Cover page with a running headIntroduction: What is the economic meaning of a recession?· A brief discussion of fiscal policies· A brief discussion of monetary policiesConclusions: 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 reducingunemploymentReference

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