Effectiveness of the Counter-Cyclical Policies
ECO/561
Table of Contents
IntroductionThe Great RecessionThe Housing MarketSupply and DemandGovernment PoliciesFiscal PoliciesMonetary PoliciesConclusion
Introduction
Between December 2007-June 2009 the United States experienced the Great Recession. During the worst part of the Great Recession, virtually every segment of the U.S. economy was adversely affected. Employment losses were severe, but also unevenly distributed: men, the young, and the less educated suffered disproportionately in the recession’s aftermath.
The Great Recession
Started December 2007-June 2009Global shift in the marketLargest downturn since the Great DepressionDecline in production and unemployment
Housing Market
Housing bubble Expenditures on household itemsEmployment in residential construction and housing-related industriesPrices for household items and commodities Injuries in occupations involved in building and maintaining our homes
Supply and Demand
Government involvementIncrease in demandDecrease in supply
Monetary Policies
Federal Fund RateInterest rates
Fiscal Policies
Government SpendingTax collectionsLimitations
Average Family Wealth 1995-2010
TABLE 1 Median and Average Family Wealth, Survey Years 1995–2010 (in 2010 Dollars)
YearMedianAverage*1995$ 84,000$ 307,9001998 98,100 386,7002001 106,100 487,0002004 107,200 517,1002007 126,400 584,6002010 77,300 498,800
Construction Unemployment
Conclusion
The Great Recession severely impacted different markets from 2007-2009The housing market, also known as the housing bubble The continued to soften, people began to lose their jobs, and the banking industry was in crisis.The government try to intervene by offering stimulus packages and lowered interest rates through the banks.Supply decreased and demand sparked, Families spent more and made less and many people in the construction industry was unemployed.
References
https://www.bls.gov/spotlight/2014/housing/pdf/housing.pdfhttps://www.federalreserve.gov/newsevents/speech/bernanke 0100103a.htmKatz, Lawrence, 2010. Long Term Unemployment in the Great Recession. Retrieved from https://scholar.harvard.edu/lkatz/files/long_term_unemplo yment_in_the_great_recession.pdfMcConnell, C.R., Bruce, S.L., & Flynn, S.M. (2015) Economics: Principles, problems, and policies (20th ed). Boston, MA: McGraw-Hill/Irwin
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