Discussion 3 macroeconimics

Shelita Truitt posted Nov 8, 2020 5:29 PM

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Hello, 

 

During the period of 2000-201 there were multiple events that happened in the U.S. causing the economy to have to rebuild itself. One major change in independently spending was during the Great Recession. The recession began between 2007-2009. The United States experienced the most severe recession in the postwar period. The 4% decline in gross domestic product was reversed more than four years after the beginning of the recession. Employment losses were at a high but the men, young, and the less educated suffered the most during this time. Two policy tools were used to aid in the economic recovery, monetary policy and fiscal policy. Monetary policy consists of actions taken by the Federal Reserve, used to keep interests rates low and reduce unemployment during and after the recession. Fiscal policy includes various forms of government spending and tax cuts enacted by Congress. Both sets can be used to increase demand, by raising output to return the economy to prerecession conditions. 

 

As the recession became worse two fiscal stimulus programs the U.S. and other countries ratified were The Economic Stimulus Act (2008) and the American Recovery and Reinvestment Act (2009). There programs used different combinations of government spending and tax cuts. The Economic Stimulus Act was created to transform the structure of the economy, tax relief, improve health care facilities and increase educational opportunities.  A change in fiscal policy has a multiplier effect on the economy because fiscal policy affects spending, consumption, and investment levels in the economy.