Cheyenne Malika Wells
Professor Michael Winterhalter
Macroeconomics 8:00-9:20
Thursday, November 19,2015
Final Class Paper
Home of the Brave Caring Government or Slowly Adapting Dictatorship?
In this paper, I will tell you about the United States’ Federal Government and how they
enact their countries Fiscal Policy. I will also speak of the times where the economy cannot help
themselves, what the government must do. Even though I will also tell you whether or not I think
the fiscal policy is well executed and who Ben Bernanke and John Maynard Keynes is, while
further elaborate about discretionary fiscal policy, and speak of the times when the government
must step in to improve the economy when the economy cannot help itself. In my opinion, our
country as a whole is improving with its economic growth, price stability, and full employment.
I wanted to point out page 748 that broadcasts seven key points in history where
mainstream economists have targeted policy successes over the past three decades. I am only
going to choose three key points in history that really impressed me. The first one would have to
be in 1983 when a tight money policy was introduced. This policy dropped inflation from a high
percentage of 13.5 in 1980 to 3.2 percent in 1983. Secondly, I would like to shine a light on the
time when monetary policy and expansionary fiscal policy was needed to improve the economy.
In late 2001 and 2002, expansionary fiscal and monetary policy helped the economy recoup from
a series of “economic blows”. This included the collapse of numerous internet start-up firms, a
severe decline in investment spending, and an abrupt decline in stock values, as well as the
impacts of terrorist attacks on September 11, 2001. Lastly, I would like to speak about the time in
2007 when the Fed actively responded to a crisis in the mortgage market by ensuring monetary
liquidity in the banking system. Aside from aggressively lowering the Federal funds rate from
5.25 percent in the summer of 2007 to just 2 percent in April 2008. By creating and using its
term auction facility, the fed greatly increased the reserves of the banking systems. Believe it or
not, it also undertook other lender-of-last-resort actions to unfreeze credit and to prevent the
possible collapse of the entire financial system! During this severe recession, the Fed held the
Federal Funds rate at a low of 0 to 0.25 percent range to break the downward slide of the
economy and help promote a healthy economic recovery.
Major Actions have been taken in place to prevent further debt as well as the repetition of
the deepest and longest lasting economic downturn of the Western Industrialized World, what is
known as The Great Depression which lasted from 1929 to 1939. While we have incurred The
