Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
the impact of Monetary and fiscal policy
the impact of Monetary and fiscal policy
the impact of Monetary and fiscal policy
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: the impact of Monetary and fiscal policy
In 2001, after the longest period of economic expansion the country has witnessed historically, the United States of America entered into its tenth recession since the end of World War II. A recession transpires when at least two quarters of a year are plagued by a sharp downturn of the country’s gross domestic product or GDP. More specifically, when a recession occurs, unemployment increases resulting in less consumer spending which is associated with poor business performances. Studies by the National Bureau of Economic Research (NBER) concluded that during March of that year, a pinnacle in business occurrences declared the end of the expansion and the arrival of an inevitable and damaging though short recession. In a state of urgency, the president at the time, George Bush, encouraged Congress to ratify a stimulus package plan which would seek to improve the standing of the economy. The NBER theorized that the infamous act of terrorism which took place on September 11th placed an even greater strain on the already damaged financial system because it wreaked havoc on many markets and businesses such as the airline industry. Many times, a recession occurs due to economic disasters that are enough of an impact on society to disrupt expenditures of large-scale businesses and individual citizen households. Consequently, aggregate demand decreases along with employment. Factors such as international conflicts, technological fluctuations and the endeavors of monetary legislators all contribute to the overall American economic status. When a recession does not occur, it can be concluded that the economy is not experiencing a true business cycle but is in a continuous expansion. The rate at which the economy is evolving can be assesse... ... middle of paper ... ...ommenced interest rate cuts because it was already at an all-time low. Federal income and estate taxes were slashed during President Bush’s presiding term in office. Trillions of dollars along with federal surplus has been replaced with diffident debits. As stock markets decline, spending may also lesson. Business capital assets can aid the economy during recessions, though it grows at a slow pace. The country’s national return from economic decline will mirror that of Washington’s because the capital’s economy profited drastically more than most states from stock option revenue and the high technology industry, software and dot com bonds. Before September 11th, the majority of air travel companies were already experiencing monetary problems thus any financial assistance offered to them by the federal government would have been improbable in quickening the rebound.
For starters a few days before the attack on 9/11, the airlines stocks did go up. Which means the supply and demand was greater. America was making more money, which is good. The airlines that stocks markets went up, were the airlines that were hijacked which than lead to them going bankrupt. Gabi Logan was saying on USA today “ Despite this government-funded measure, several prominent American airlines declared bankruptcy not long after the 9/11 attacks.” Due to bankruptcy more than just money was
President Barack Obama signed The American Recovery and Reinvestment Act on February 17th, 2009 into law. This Act was an effort to jump-start the economy, and also to save and create millions of jobs in America. Obama selected Vice President Joe Biden to over look the application of the Act, while working with cabinet members, the nations governors, and mayors to make sure the implementation of the Recovery Act are not abrupt, but as efficient and effective as Obama intended. The Recovery Act called for $825 Billion which changed as it moved through Congress. However, in doing this it stirred up a lot of commotion with the Republicans within Congress, who favored a different approach to the economic dilemma. The Recovery Act is essentially an expansionary fiscal policy, in that it wants to increase government spending while decreasing taxes. The Act included $550 Billion to be spent within the first two years of it being implemented, much more than the government spends annually on programs. Which is not including defense and benefit programs such as Medicare and Social Security. Most of the $275 Billion in tax cuts would be going to the middle-income families in the form of $1,000 tax cuts, while businesses and other tax cuts would make up the rest. About $318 Billion would go to states and local governments facing the possibility of layoffs and/or tax increases. Another $102 Billion would be used to help victims of the recession with unemployment insurance, health care, food stamps and job training, jobless aid would also be increased by an extra $25 a week. As we can see the evidence is clear and growing by the day, the Recovery Act is working to soften the greatest economic downfall since the Great Depression and is laying ...
In conclusion, regardless of Macropoland’s current economic condition, it is fair to say that it is all part of the business cycle. The business cycle has three parts: peak, trough, and peak. The peak is the date that the recession starts. In Macropoland’s case, the peak would be at the beginning of 1973, its trough somewhere between 1973 and 1974, and then its peak again at 1974. In the second scenario, Macropoland is either at its trough, where it is about to head up again because of its low inflation rate, or it is at its expansion, on its way to heading to its next peak.
Along with the low stock index numbers of September 17th, the airline industry and travel stocks were also rocked. One of several airlines announcing layoffs, US Airways said that they would be terminating 11,000 jobs. These heavy losses were contributed to airlines “being grounded last week [week of September 11th], plus passengers have been apprehensive to fly, in the wake of the hijackings” (Stock Markets Reopen 1).
...vailable for stimulus programs to boost the economy out of the 2008 financial crisis. This caused fewer jobs to be created, which meant less tax revenue and more debt.
The immediate financial repercussions of the terrorist attacks were astronomical. Makinen (2002) reports airlines received a $15 billion federal aid package. Additionally, insurance ...
The above diagram shows the GDP growth rate of United States of America during the recession. From 2008 to 2009, the GDP growth rate of USA fell from approximately +3 to about -7. After President Obama created the Stimulus plan in 2009, the GDP growth rate increased rapidly from -7 to almost +5. This shows that the policy applied by US government works very well to help America recover from Great Recession. Besides, the US government did cut taxes. This was successful as it increased the net income of people. American can have more money in their pocket to spend. Moreover, the Federal Reserve decreased the interest rate to help United States to get out of the recession. Reduced in interest rate help the economy by encouraging
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
Every few years, countries experience an economic decline which is commonly referred to as a recession. In recent years the U.S. has been faced with overcoming the most devastating global economic hardships since the Great Depression. This period “a period of declining GDP, accompanied by lower real income and higher unemployment” has been referred to as the Great Recession (McConnell, 2012 p.G-30). This paper will cover the issues which led to the recession, discuss the strategies taken by the Government and Federal Reserve to alleviate the crisis, and look at the future outlook of the U.S. economy. By examining the nation’s economic struggles during this time period (2007-2009), it will conclude that the current macroeconomic situation deals with unemployment, which is a direct result of the recession.
Between January 2008 and February 2010, employment fell by 8.8 million, the largest decline in American history. The 2008 Recession, which officially lasted from December 2007 to June 2009, began with the bursting of an 8 trillion dollar housing bubble. Job losses during the recession meant that family incomes dropped, poverty rose, and people all over the country were suffering. Things like this don’t just happen. Policy changes incorporated with the economy are often a major factor. In this case, all roads lead to one major problem: Deregulation. Deregulation originating from the Carter and Regan Administrations, combined with a decrease in consumer spending, and the subprime mortgage bubble all led up to the major recession of 2008.
The recent tax cuts and interest rate cuts have helped put the economy back on track. He says that the strong growth of the U.S. economy in recent months is neither an illusion nor an accident, but it reflects good monetary and fiscal policy over the past year. He says that there has been a key surge in consumer spending, and that the main reason for that surge was the enactment of the tax cut in early 2001. He also stated that the repeated reductions by the Fed in short-term interest rates supported the expansionary effect of the tax cut. Even though the interest rate reductions were not enough to prevent the recession that began in March of last year, the lower interest rates did stimulate consumer spending through a variety of channels.
In 2009, the United States economy began to recover from the Great Recession. To aid in the recovery, the newly elected president Barak Obama created the American Recovery and Reinvestment Act better known as the second of two “Stimulus Packages.” Pa...
The business cycle is the short-run alternation between economic downturns and economic upturns (Investopedia n.d.). A recession is an economic downturn and happens in every country and some recessions are worse than others and the output of GDP and employment are falling farther and faster. The great depression lasted from 1929-1933 and was a deep prolonged downturn in the business cycle before a recovery/expansion of the business cycle occurred and GDP and employment started to rise (Krugman & Wells. 2012). The next recession lasted from 1981-1982 and was comparatively smaller than the first (Krugman & Wells. 2012). More recently in 2001 a slump in the economy was noted and was followed by the great rescission of 2007-2009 (Krugman & Wells. 2012). Recession is defined as a “period of at least two consecutive quarters (a quarter is three months) during which the total output of the economy shrinks” (Krugman & Wells. 2012). In the United States the National Bureau of Economic Research (NBER) is assigning the task of determining when a recession begins and the NBER looks at a variety of economic indicators such as employment and production (Krugman & Wells. 2012). Every business cycle recession has a negative impact on the economy the recession’s deferrer on the strength of the impact on the country. Consider the two charts for Figure 21-5 of the more recent recessions of 2001 and 2007. The Recession of 2001 did not last as long as the recession of 2007 and did not have as much of an economical hardship on the business cycle and as shown 2007 dipped greatly in industrial production. In the second chart it demonstrates a recession at the point the economy turns from expansion to recession or the business-cycle peak. Then in the char...
The economy has been progressing, new inventions, and ideas have funded America's economy. However, There were times when America's economy had dropped to a sudden standstill and many
The current state of the economy in the United States has been slow in recent months. While the economy is not currently in a recession, we may eventually fall victim to the first recession we’ve had in nearly ten years. The economy in general is showing growth, just not much. It will be difficult to predict what exactly will happen to the US economy in the future. Many economists do not agree on what will become of the economy. Some feel that we will begin a recession over the next year, and some feel that there is significant policy implementation that will allow us to dodge a recession and regain our economic strength. There are many factors that make up the US economy. The means in which I will discuss the overall growth and current status of the economy is by analyzing the Gross Domestic Product, and discuss the factors that cause it to rise and fall.