16-34. Research the 2008 financial crisis and the Great Recession t

16-34. Research the 2008 financial crisis and the Great Recession t

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June 27, 2022
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16-34. Research the 2008 financial crisis and the Great Recession that followed. Describe the difference between fiscal and monetary policy by using Congressional actions and Federal Reserve Bank actions as examples. Which was more effective?

Answer and ExplanationSolution by a verified expert

Explanation
Policy F and Policy M can be distinguished as follows:

Policy F is governed by the ruling government of the country by making changes in the income and expenses of the government. On the other hand, Policy M is managed by the central bank without any intervention of the government by reducing or changing the exchange rates and interest rates to ensure a proper cash supply in the economy.
The government announced a fiscal stimulus that helped in curbing the recession by providing financial aid to families and small businesses through subsidies. The government announced huge tax reductions and raised its spending on healthcare, infrastructure, and energy, which helped in generating employment opportunities for people. This helped in increasing demand and purchasing power. On the other hand, the central bank reduced the interest rates and interchange rates to ensure a better cash supply in the economy and an enhanced rate of exports to bring in foreign currency.
The combination of both policies was effective. Policy F has the direct ability to boost the economy through government spending and tax relief, which helps in generating employment and improves purchasing power. Policy M helped in strengthening exports by reducing the interest rates and the exchange rates.

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Work Cited:

Pettinger, Tejvan. "Monetary Policy Vs Fiscal Policy - Economics Help". Economics Help, 2021, https://www.economicshelp.org/blog/2253/economics/monetary-policy-vs-fiscal-policy/.
Sample Response
During 2008, the global recession prevailed and slowed down the economic growth of developed countries.

The differences between Policy F and Policy M are as follows:

The government of the ruling party largely controls Policy F, whereas Policy M is governed by the central bank, which operates independently.
Policy F involves the changes made by the government through taxes and subsidies, whereas Policy M refers to the control of the call and distribution relating to the money in the economy by the central bank.
Both the policies combined were more effective, as the cash supply and purchasing power were increased because of reduced tax rates and interest rates by the government and the central bank, respectively.

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