Answer To: \Step I - Develop a stance on an economics policy; since this is a combined micro/macro course any...
Komalavalli answered on Jun 22 2021
Introduction
Let us recall the 2008 situation. Everything was going to leave our economy, our employment, and Wall Street. In the meanwhile, amid enormous job losses and severe bond losses, sluggish, sometimes unfair but continuous economic development and labor and financial markets, a dramatic economic contraction defined the time. The policy of the federal government had a lot to do with ensuring that the profound drop was not longer and that recovery took place sooner than would otherwise be. There is a distinct change between the labor market, the economy and the financial markets. The scenario in 2008 is a very distant one.
In 2008, the Troubled Asset Relief Program, the US Recovery and Reinvestment Act of 2009 and 2010 Tax Relief, Unemployment Insurance Reauthorization, and the Job Creation Act progressively contributed to a change in the US economy. Those three policies occurred at key moments in which the economy would suffer significant damage without bold, focused, and rapid action by policy makers. In October 2008, the Troubled Asset Relief Program had been launched to let the federal government to spend $700 billion to stabilize the difficult banking system. Most of this money was spent in the first half in the closing months of 2008 pumping liquidity into struggling banks to ensure that our system did not collapse. A series of tax reductions and expenditure initiatives, totaling 787 billion dollars throughout almost two years until the end of 2010, had been adopted in February2009 by the American Recovery and Reinvestment Act.
Further unemployment insurance and payments under the Social Security Act almost immediately began to flow and infrastructure expenses commenced until the summer of 2009. Congress then launched fresh tax cuts and prolonged unemployment insurance coverage in December 2010 as benefits ran out under the Recovery Act.The result is that once every legislation was enacted and money began to reach major competitive markets, finance markets, the economy and the labor market were rapidly improving. The policymakers responded to avert deteriorating economic conditions. These three steps performed just as they were intended.
Certainly, if these policy initiatives had given them more bangs, they could have been more successful and efficient. More support for the suffering homeowners might have been part of this problem asset relief program. More infrastructure funding may be included in the Recovery Act, with salary tax cuts and increased unemployment pensions separated from needless cuts for the affluent. However, none of this additional support was feasible for our economy and our workers because of the conservative hostility to more efficient and effective governmental interventions.
However, it spared the banking system from implosion through the Troubled Asset Relief Program. Although the program's design, the advantages of it being shared equitably and whether the money have been spent in the long term as effectively as feasible, might reasonably be questioned, the economy is not benefiting. Another great depression was certainly avoided by the Recovery Act. And today's economic recovery is strengthened by the tax cuts and prolonged unemployment insurance payments.
The ways in which current economic and financial statistics reveal that these policies worked out, each one of them started with the Troubled Asset Relief Program, followed by the Recovery Act, followed by the latest payroll tax cuts and widespread unemployment insurance.
The tightening of loans is facilitated by the implementation of an asset relief program:
A net increase of 83,6% of senior loan agents said that in the fourth quarter of 2008, lending criteria were tightened, from 19,2% in the fourth quarter of 2007. The ratio decreased steadily in 2009. The...