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Discuss The Impact And Response Of 2007 To 2009 Recession

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Impact and response of the 2007 to 2009 recession The Great Recession of 2007-2009 proves to be one of the most profound economic crises in recent history, evident in the lasting effects on global economies and financial systems. The Great Recession was characterized by a steep decline in economic activity, widespread unemployment, and a collapse in the housing market, which left lasting scars on individuals, businesses, and governments globally. Through analysis of the recession, we can contextualize the decision-making made by economic institutions through fiscal and monetary policy to understand policy effectiveness and how we approach economic crises. The recession began with the collapse of the housing market, caused by risky lending practices, …show more content…

They released stimulus, interest rate cuts, and policies like TANF and UI that aided in decreasing the unemployment rate, though at a slower rate. The graph displays the effect of fiscal policy as well as a multiplier and alludes to job creation. Monetary policies, which are central bank activities that are directed toward influencing the quantity of money and credit in the economy to stimulate economic growth, were enacted when the Fed removed reserve requirements to induce cash flow/liquidity. They offered alternatives to discount window loans and bank bailouts, they also enacted massive open market operations and non-conventional policies in the form of quantitative easing which is like an open market operation with non-treasury bond assets. There was also the Toxic Asset Relief Program and automatic stabilizers, which are public policy mechanisms built into government budgets that increase or decrease spending during recessions to adjust for fluctuations in real GDP, they are fiscal. Fiscal policies, which are government interventions through increased spending and tax cuts to increase economic growth, were enacted through policies like the omnibus spending bill, which was an 800-million-dollar stimulus

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Chapter 11 1. Fiscal policy can be described as the use of government purchases, taxes, transfer payments, and government borrowing with an objective of influencing economy-wide variables such as the employment rates, the economic growth, and the rates of inflation (McEachern, 2015). 1. When all other factors are held constant, a decrease in government purchases will lead to an increase in the real GDP demanded 2. An increase in net taxes, holding other factors constant, will lead to an increase in the real GDP demanded.

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The Great Recession was a period of general economic decline observed by world markets beginning around the end of the first decade of the 21st century. The recession was a result of a financial crisis in 2007 which effected the years to come . The primary source of this problem was that banks were creating too much money. In addition, banks had doubled the amount of money and debt in the economy. Resulting in a financial crisis as the government and banks had failed to constrain the financial system’s creation of private credit and money.

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“If you want to understand geology, study earthquakes. If you want to understand the economy, study the Depression” (Ben Bernanke Quotes). Ben Bernanke, a tenured professor at Princeton University, served two terms as the Federal Reserve chairman from 2006-2014 and orchestrated the Fed’s actions during the Great Recession. Being a student of the Great Depression, Mr. Bernanke’s policies and regulations surrounding the late 2000’s crisis reflected the adaptations to the Fed’s failed actions in the 1930’s. Throughout economic history, the stability and health of our economy depends on the balance achieved by the Federal Reserve over their three major roles: Monetary Policy, Regulation, Lender of Last Resort.

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Fred Bergstens’ Take The Reagan administration promoted fiscal and monetary policies that were then deemed well for the American economy and people. They wanted to cut expenditures for social and public programs, increase the defense budget, and bring economic calm for the United States who were dealing with stagflation. Furthermore, lowering the non-defense expenditures were highly desirable - though, the Reagan administration promoted tighter fiscal policy and less stringent interest rates that have been shown to combat inflation, however, Reagan’s policy mixing was not a suitable plan for this problem.

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Fiscal policy Following the great recession that lasted between December 2007 and June 2009, the federal government undertook several actions to promote growth and development. The government used a fiscal stimulus package worth $787 billion and a bank bailout measure worth $700 billion. In addition, the government passed the American Recovery and Reinvestment Act of 2009 to help create and save jobs. All these measures helped in providing some form of economic relief against the effects of the recession.

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These policies were there to create economic growth, reduce inflation, and create more jobs. “the Reagan policy mix worked as advertised to slow the growth in the supply of money while increasing the demand for it. As a result, inflation collapsed, interest rates fell, and economic growth revived. ”(Kemp) Additionally,

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Taking on the task of managing the U.S economy is a very tedious task and should not be taken lightly. Nevertheless, our country has been tried many of times throughout its short lifespan, and we can learn from previous mistakes to help us get ready for any future financial problems. Increased government spending to fight recessions The protagonist opinion in the text, reviews the contrasting views between the recent recession of 2008-2009 and the 1930's "Great Depression", (Mankiw, 2015).

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They also used expansionary fiscal policy to combat recessions by stimulating economic growth. Bush fought the 2001 recession with tax cuts. He designed the first tax rebate, the Economic Growth and Tax Relief Reconciliation Act, to jump-start consumer spending. Obama, in turn, passed the $787 billion Economic Stimulus Act. This act created jobs in education and infrastructure, ending the recession in the third quarter of 2009.

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The policymakers looked to see what could be done to avoid and amend mistakes made during the Great Depression. During the 1930’s, the national leaders at the time went with fiscal plans to based on balanced budgets. Tax revenue at the time fell with economic growth and when the economy needed spending it was cut. Thankfully this time the U.S government did not cut spending. Instead they spent money on projects as simple as road construction and schools.

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Some of the major policy measures of FDR's New Deal was to provide relief, recovery, and reform to the nation's economic institutions. The New Deal in America changed the role of American government involvement in the economy completely. The American economy had failed after years of governmental non-intervention. Before the New Deal, the government had essentially no role in steering the economy or in providing for the people.

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Fiscal policy is the use of government finances and it represents the behavior in whole, of a national economy. Government budget, annual spending, tax, etc. are some of the areas covered under Fiscal Policy. Therefore, budget not only covers the process by which governments collect revenues, but also promotes economic stability. Fiscal policy has two basic drivers: government spending and taxation. Government spending is the money that the governments spend on services and amenities that it provides to the citizen of the country.

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Fiscal policies improve the growth of our economy by decreasing unemployment and increasing the amount of spending in our economy. Monetary policies are set in place to manage inflation. Even though the recession was a low point for our economy, the plans that were set in place helped the U.S. get back on its feet and continue to be the great country that it is today. 1. Introduction:

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Besides fiscal policies there were also monetary policies that were implemented during this time that helped provide much need liquidity and better financing options within the market. Without these much-needed policies the Great Recession would have lasted much longer than in did. Even today we are still feeling the ramifications of the Great

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Consequentialism is the foundation of utilitarianism, its core belief is that an act is morally right if and only if it produces more good results then bad results, on balance, than any other alternative. Similarly, utilitarians believe that an act is morally right if and only if it produces more overall happiness than unhappiness, on balance than any available alternative. In utilitarianism, the moral goal is to increase the amount of good things (pleasure and happiness) and decrease the amount of bad things (pain and unhappiness) for the greatest number of people. Utilitarianism can be broken up into two categories, Rule and Act utilitarianism. For both theories, they can agree that the only thing intrinsically valuable is pleasure/happiness

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Unemployment relief was the biggest factor in the growth of the federal government budget. The Federal Emergency Relief Administration was the main relief program during this time producing many jobs to the unemployed. Federal Relief programs caused less people working for private companies. It is said that federal relief redistributed wealth to those without a job and no income. Unemployment relief was taken care of pretty well by the FERA but not everyone benefited due to the amount of people in the U.S. were

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