Question

The Great Financial Crisis (GFC) in the United States: Causes and Policy Responses Goal Analyze the recent (2008-2009) episode in the United States – the Great Financial Crisis (or Great Contraction). Your job is to write a 500-word essay that will: (a) discuss the antecedents to the episode – seeds of the crisis that were previously sown. Then, using the IS-LM model, show both (b) the shocks to the economy which occurred and (c) the government policy response. Also, provide a short discussion of the implications for health care business/industry. Background Although it happened some time ago, the Great Financial Crisis (GFC) of 2008-2009 continues to be heavily discussed, including in the popular press. For this assignment, you should read the article “A warning from the almost-depression” by Robert Samuelson, Washington Post, September 16, 2018. For several reasons, this episode is well-suited to the IS-LM model. Your job is to discuss that episode using the model. PLEASE PROVIDE THE REFERENCES THAT YOU USED AND NO Plagiarism (DO NOT COPY FROM OTHER ANSWERS).

Answer 1

The great financial crisis was one of the greatest recession taken place in USA from 2008 to 2009 . The recession has effected the economy of USA in very high level , everyone in the economy of every level was suffering from its effects . There are many reasons behind the occurrence of the great recession at that time was deregulation in the financial industries due to which banks started asking for more mortgages and indulge in the process of hedge funding in which they use to look for the maximization of the profit any how in up and down markets .

The impact of this in the economy was that , due to the low economic growth the the households of USA lost there average income till the end of the year 2009 . Costs to the federal government due to its interventions to mitigate the financial crisis amounted to $2,050, on average, for each U.S. household. At that point of time people was really in need of the economic reforms .

The government at that time take the decision of the enactment of fiscal stimulus programs in which the government will use the combination of both the rise in the level of there spending to low down the debt rate on them and to put some cut in the tax rate so that there will less burden on the shoulders of the investor and the households and the economy can try to recover slowly by the passage of time. In this response from the government the interest rate will remain low .

DISCUSSING THE EPISODE USING THE IS/LM MODEL ---

Due to the cutting of the taxes the IS CURVE will shift rightwards .

Due to the actions taken by the government for the rise in its expenditures on banks and the airline industries the IS CURVE will shift rightwards .

Due to the rise in the supply of money in the economy that's expansionary monetary policy the LM CURVE will shift rightwards .

REFERENCE ------

https://www.google.com/search?q=GOVERNMENTS+RESPONSE+OVER+THE+GREAT+FINANCIAL+CRISIS+IN+USA&oq=GOVERNMENTS+RESPONSE+OVER+THE+GREAT+FINANCIAL+CRISIS+IN+USA&aqs=chrome..69i57.30424j0j7&sourceid=chrome&ie=UTF-8

https://www.thebalance.com/what-caused-2008-global-financial-crisis-3306176

https://en.wikipedia.org/wiki/Subprime_mortgage_crisis.