Demand-side Policies and the Great Recession of 2008

Demand-Side Policies and the Great Recession Of 2008
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Economic meaning of the recession
Recession refers to the duration characterized by the decline in the economy of a nation. Recession results from the increased rates of unemployment, the reduction in the markets of houses, and the decline in the stock market. The leadership of federal includes the President, Federal Reserve, along with the central administration. Moreover, recessions in any place result due to the wide range of factors. These factors include increased cases of inflation, increased rates of interest, the decline in consumer confidence, and a decline in wages. Therefore, addressing cases of the recession need adoption of economic policies that facilitates the enhancement of the economy. According to a report by Ohanian (2014), U.S government authority focused on cases of cutting tax while increasing the public spending. The used measures result in the stabilization of output growth along with inflation. Besides, efforts through adoption and implementation of financial and monetary policies lead to the rebound of stocks and assets.
Fiscal policies
Utilization of fiscal policies form the primary instruments used in promotion of the maximum performance of the economy. Fiscal policy remains to be a useful tool that examines types of depression (Caballero, 2013). For example, authorities are obliged to have a change on the expenses because the process is cheaper concerning the duty charge. However, the U.S central banks affect the decisions of agents of the economy during the implementation of financial strategies. Various channels that influence decisions of agents comprises of a channel of interest rates, credit channel approach, the mechanism of opportunity, together with the procedure of the switching rate.
Monetary policy
These are policies implemented through a process of transformation in the federal fund's rate and the supply of money. For example, interest rates in the market like corporate bond rate, mortgage, as well as auto loan receive influence by different transformations in federal fund types. Besides, any change imposed in interest rates affects investment and decision for saving (Tanzi, 2015). Therefore, monetary policies during the period of recession remain to be expansionary in nature. Monetary policy reduces the rate of federal funds to act as the incentive for different organizations by creating employment opportunities while organizations expand their operations. The idea aids in increasing rate of consumption of goods and services among customers.
How the application of demand-side policies during the Great Recession of 2008 has been successful in restoring development of economic and reducing c...