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Assessment Information To complete this assessment you will write a report comprised of two parts. In Part 1, you will analyze corrective actions taken by the Federal Reserve as a result of a crisis related to the Great Recession. In Part 2, you will analyze a government intervention program and the market failure that led to the intervention.

Attached is the Rubric for Review

Download and save Competency 2 Assessment Rubric and use it as a guide when completing your assessment.

Assessment Directions Assume the role of a business consultant helping interns understand the finer points of economics. You have been tasked with developing an analysis comprised of two parts. The goal of your analysis is to help the interns focus on real world application highlighting corrective actions by the Federal Reserve and a government intervention program during the time of crisis.

Create a report incorporating the following:

Part 1: Federal Reserve

Choose 1 of the following topics related to the Great Recession:

• The housing price bubble, collapse, foreclosures, bailout of underwater mortgages • Subprime mortgages and derivatives, bailout of FNMA, Freddie Mac, and AIG • The banking industry crisis, bailout of commercial and investment banks

Write a 500- to 750-word analysis (Part 1 of your report) of 1 of the following corrective actions taken by the Federal Reserve as a result of the crisis:

• Quantitative easing • Purchase of toxic assets from financial institutions • Paying interest on reserve balances

Address the following in your analysis:

• Actions taken by the Federal Reserve to mitigate the crisis • How the corrective action helped to restore stability to the financial system • How the corrective action should prevent recurrence of a similar crisis

Note: Use of charts and graphs is encouraged, with appropriate citations. Any charts or graphs retrieved from the Federal Reserve Bank of St. Louis FRED website may only be included when the data sources used by FRED are U.S. government sources, such as the Bureau of Economic Analysis or the Bureau of Labor Statistics.

Cite at least 2 academically credible sources.

Part 2: Government Intervention Program

Review the Competency 2 Resources: The Roles of Government in the Economy. Analyze 1 of the following government intervention programs:

• Counter cyclical fiscal policies (countering economic disruptions such as the housing bubble and the Great Recession)

• U.S. agriculture support programs • Assistance for low Income families (choose 1):

o Housing vouchers o Earned Income Tax Credit (including Child Tax Credit) o Supplemental Nutrition Assistance Program (SNAP)

• Low-income health care (choose 1):

o Medicaid (including Children's Health Insurance Program). o Affordable Care Act expansion

• Social insurance programs (choose 1): o Old Age, Survivors, and Disability Insurance (OASDI) o Medicare o Unemployment insurance

Now that you have identified a government intervention and the market failure leading up to this intervention you are ready to continue moving forward.

Write a 750- to 1,050-word summary of your analysis (Part 2 of your report) in which you address the following:

• Analyze the arguments for government intervention versus those for market-based solutions. Hint: See the information about market failures.

• Examine who has been helped and who has been hurt by the selected government intervention.

• Examine externalities and unintended consequences of the intervention. • Explain whether the cost of the intervention you selected, as a share of GDP or the

number of participants, is increasing, decreasing, or varying with the state of the economy. Your analysis should be based on the cost trend (or number of participants) since 2000 or since its inception if after 2000.

• Analyze credible economists’ opinions on the success or failure of the intervention in achieving its objectives.

• Recommend whether the program should be continued as is, discontinued, or modified based on your conclusions. Defend your recommendation.

Note: Use of charts and graphs is encouraged with appropriate citations. Any charts or graphs retrieved from the Federal Reserve Bank of St. Louis FRED website may only be included when the data sources used by FRED are U.S. government sources such as the Bureau of Economic Analysis or the Bureau of Labor Statistics.

Cite at least 2 academically credible sources. Compile Parts 1 and 2 into one report.

The Role of Money in The Economy

• Federal Reserve System: Monetary Policy • Gross Domestic Product (GDP)

Web Resources

• American Recovery and Reinvestment Act of 2009

• Bailout Tracker • Emergency Economic Stabilization Act of 2008 (TARP) • Federal Reserve Economic Data (FRED) • Financial Crisis Inquiry Commission • The Great Recession and its Aftermath

The Roles of Government in The Economy Web Resources

• American Recovery and Reinvestment Act of 2009 • Bailout Tracker • Bureau of Economic Analysis

The Bureau of Economic Analysis provides extensive links to national, international, regional, and industrial statistical information.

• Emergency Economic Stabilization Act of 2008 (TARP) • Federal Reserve Bank of San Francisco • Federal Reserve Economic Data (FRED) • Financial Crisis Inquiry Commission • The Organisation for Economic Co-operation and Development • U.S. Bureau of Labor Statistics Industries at a Glance

U.S. Bureau of Labor Statistics Industries at a Glance covers more than 100 industries and displays a snapshot of national data obtained from different BLS surveys and programs. The data shown are based on the NAICS supersector, sector, and industry level.

• United States Census Bureau

The Census Bureau's mission is to serve as the leading source of quality data about the nation's people and economy.