Expansionary Monetary Policy Paper

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From December 2007 through June 2009, the United States economic situation resembled the beginnings of the great depression of 1929-1939 that was spurred on by the sudden failing and collapse of the stock market. Since 2009, the U.S. has been slowly but steadily recovering. The current macroeconomic situation in the United States is multi-faceted. Several processes are happening at the same time. A low level of inflation has prices controlled and not unreasonable, and unemployment levels are the lowest since 2007. “Average monthly job gains have increased in each of the last five years, reaching 246,000 a month last year. The unemployment rate fell to 5.6 percent in December, closing in on its prerecession level of around 5 percent” (Appelbaum, …show more content…

The Expansionary Monetary policy is what is actively in effect as a means to maintain or increase the downward trend of unemployment and increase the real GDP in the U.S. economy. An Expansionary Monetary Policy is a set of guidelines established by the Federal Reserve System that will increase the money supply by lowering interest rates and expanding the Real GDP (McConnell, Brue, & Flynn, 2012, p.681). Lower interest rates make money more affordable to borrow. It has become easier for financial lenders and banks to loan money; this increase will boost aggregate demand, consumer spending and ultimately economic …show more content…

As debt and the strength of the U.S. economy increases, we need to be ever mindful of the events that caused the great recession of 2007 and work diligently to prevent a recurrence.

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