ipl-logo

Expansionary Monetary Policy Paper

586 Words3 Pages

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.

References
Appelbaum, B. (2015). Federal Reserve Won’t Raise Interest Rates Before June, at Earliest. Retrieved from http://www.nytimes.com/2015/01/29/business/federal-reserve-rate-decision.html
Associated Press. (2015). Obama to Reduce FHA Mortgage Premium Rate to Spur Buying. Retrieved from http://www.nytimes.com/aponline/2015/01/07/us/politics/ap-us-obama-housing.html
McConnell, C. R., Brue, S.L., & Flynn, S. M. (2012). Economics: Principles, Problems, and Policies. (19th Ed). New York, NY: McGraw-Hill.
U.S. Bureau of Economic Analysis, “National Income and Product Accounts: Gross Domestic Product: Fourth Quarter and Annual 2014 (Advance Estimate),” (2015). News release (January, 30, 2015). Retrieved from http://www.bea.gov/newsreleases/national/gdp/2015/gdp4q14_adv.htm
The Editorial Board. (2015). The Economy, Past and Future. Retrieved from

Show More
Related

  • Econ211 Unit 3

    896 Words  | 4 Pages

    Keynesian economics suggests that increasing government spending and decreasing tax rates are the better ways of stimulating aggregate demand, and reducing spending and increasing taxes after the economic boom begins. For this case, the federal government will increase its spending up to the point where the inflation starts to rise while unemployment has decreased to lower levels. For the economic growth to be attained at a preferable rate, then the government should spend on public such construction of roads, incentives to producers and provision of essential services to producers for them to thrive. The expenditure will indirectly trigger the producers to produce thus leading to attainment of desired economic growth while keeping inflation at a low

    Read More

  • Federal Reserve Tools Essay

    462 Words  | 2 Pages

    I will describe how expansionary activities by the FED impacts credit availability, money supply, interest rates, and security prices. The FED uses expansionary activities to control credit availability to banks either up or down depending on what it sees as needed. This is done through the ratio rate. The lower the rate the more money a bank has to loan. The lower the rate the less money the bank has to keep on hand which means the bank has more money to loan(Tarver, E.,2015, May 28).

    Read More

  • Why Was The American Economy Dbq

    710 Words  | 3 Pages

    This quote exemplifies how America’s debt was no longer an embarrassment and people bought without concern for consequences. With a mindset such as this, it was inevitable that the day would come when the economy would face these repercussions of speculation. On October 29,

    Read More

  • What Are The Similarities Between Great Depression And The Great Recession Of 2007

    957 Words  | 4 Pages

    In the Recession of 2007 the economy used the monetary and fiscal policy to keep the economy falling into another Great Depression. In the Recession was greatly used  to fix the economy but was fairly new in during the Great Depression since it was established in

    Read More

  • How Did The Federal Reserve Increase Interest Rate

    1086 Words  | 5 Pages

    On March 15, 2017, the Federal Reserve has risen its interest rate by 0.25 percent. With this increase, the minimum interest rate that investors demand on their investment increased from 0.75 percent to 1.0 percent. This is the second increase in a span of 3 months, with the previous one occurring during December 2016. With two increases happening so quickly, pulling the interest rate away from zero which occurred during the economic depression of 2008, people finally have more money to spend as the Federal Reserve is increasing borrowing costs. Before December 2016, the economy was growing much more slowly than it is now, as it had been 12 months before the Federal Reserve had increased the interest rate.

    Read More

  • Great Depression Dbq

    746 Words  | 3 Pages

    America is no stranger to economic downturns. As an emerging industrial power of the late 19th century, America had a rough start in its rise as the largest industrial powerhouse in the world. The Great War added to America’s economic dominance, with exports skyrocketing in an effort to supply the allies. Even so, the 1920’s saw a massive rise of American consumerism and spending. By 1929, however, the Stock Market Crash on Black Tuesday saw the beginning of the Great Depression with the American economy in pieces.

    Read More

  • What Are The Similarities Between Great Depression And The Great Recession

    1220 Words  | 5 Pages

    The Great Depression and Great Recession have been known to be the greatest economic crises in the United States. The Great Depression (1929-1939) was a period of drastic economic decline, resulting in the failure of almost half the nation’s banks and the unemployment of several tens of millions of Americans. On the other hand, the Great Recession (2007-2009) was an economic decline, impacting financial markets and resulting in the loss of jobs and homes for millions of Americans. Although the magnitude of the Great Depression was greater by far, comparisons can be made between them. This can allow one to not only enhance their understanding of these catastrophic periods but also the extent to which they were similar.

    Read More

  • Essay On How The Federal Reserve Hurt The Economy

    982 Words  | 4 Pages

    A method the Federal Reserve has used especially since the Great Recession is quantitative easing. In this method, the Federal Reserve buys government securities or other securities on the market. These securities are also known as bonds. By purchasing enough bonds, the Federal Reserve lowers interest rates and increases the money supply, in theory stimulating the

    Read More

  • Great Depression Dbq

    1640 Words  | 7 Pages

    The United States economy has seen many ups and downs in its lifetime. The economy is currently starting to gain momentum and digging itself out of the hole it was in a decade ago. Many claim that the recession we were in a decade ago was awful; the recession is nothing compared to the depression the US was in nearly a century ago. The Great Depression officially began in 1929 and ended in 1939. Despite this the US starting getting into trouble in the mid 1900’s and the pain of the depression remained long after 1940.

    Read More

  • Henry Paulson Great Depression Summary

    438 Words  | 2 Pages

    The biggest enemy to the end of the financial crisis and the beginning of an economic recovery is Treasury Secretary Henry Paulson himself. Lets forget for a minute that the decision by Paulson and Bernanke to let Lehman Brothers fail was the precipitating event leading to credit markets freezing up and the first round of financial panic. Since then, the two have been working diligently to correct this collosal mistake. But separating actions from words, we see that words are in fact much more potent. Since the end of September, every time Henry Paulson has opened his month, the Dow has dropped on average 196 points.

    Read More

  • Great Recession Research Paper

    711 Words  | 3 Pages

    In order the help end the recession the United States government along with the Federal Reserve used Fiscal and Monetary to help prevent a worst catastrophe. Fiscal Policies During the Great Recession, there were quite a few Fiscal Policies implemented. The first policy to be implemented was the Economic Stimulus Act of 2008.

    Read More

  • What Caused The Great Depression Dbq Essay

    726 Words  | 3 Pages

    In 1929, the U.S. was hit with the worst economic crisis in the history of the country, the Great Depression. The Great Depression left millions of people unemployed and cost millions their life's savings. The Depression lasted for ten long years for the American people. Since the Great Depression ended, people have studied it, trying to figure out what happened that started it all. The problem was, in fact, the poor economic habits of the people at the time, such as speculation, income maldistribution, and overproduction.

    Read More

  • Great Depression Dbq

    740 Words  | 3 Pages

    The unemployment rates went as high as 25.2% for the civilian labor force, and 37.6% for nonfarm employees (Doc E). The stock market also reached new levels of low, causing an

    Read More

  • Contractionary Fiscal Policy

    893 Words  | 4 Pages

    This results in an increase in aggregate demand. The goal of expansionary fiscal policy is to boost the economy. This was not the right time to implement expansionary fiscal policy, because inflation is currently a concern. Contractionary policy is used when the economy is doing well, but there are worries about inflation.

    Read More

  • Roles Of Money In Macroeconomics Essay

    1772 Words  | 8 Pages

    This is primarily a tool at the disposal of the central bank of a country which uses different tools to manage the macro economic variables of a country to keep the economy stable or to stabilize it in situations of fluctuations. Monetary policy can be expansionary or contractionary depending on whether the money supply is being increased or decreased in the system so as to affect economic growth, inflation, exchange rates with other currencies and

    Read More

More about Expansionary Monetary Policy Paper

Open Document