The Great Recession and the Impact on the US Economy

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The Great Recession Student Name Institution Abstract A recession refers to a period in which there is a decline in economic activity or where the GDP declines for at least two quarters. The period saw unemployment rates rise more rapidly as compared to previous recessions, reaching around 9.5% in 2009. There was also a net decrease of 63,000 business establishments. The government employed both monetary and fiscal policies to curb the effects of the recession and to spur economic growth. The Federal Reserve lowered interest rates to zero which led to increased borrowing by various individuals and businesses leading to increased liquidity. It also purchased the Freddie Mac and Fannie Mae mortgage-backed securities as well as the Treasury bonds to increase liquidity. As part of its fiscal policies, the government signed the Economic Stimulus Act which ensured that tax rebates were offered to lower and middle-income households to increase spending which would spur economic growth. The US government also increased its expenditure to spur investments and development by the signing “The American Recovery and Reinvestment Act” in the year 2009. Keywords: Fiscal policy, monetary policy, Recession, A recession in economics refers to a period in which there is a decline in economic activity or where the GDP declines for at least two quarters. The period is usually accompanied by a plummeting house market, increased unemployment, poor performance of the stock market, and a decline in the quality of life in the country. The Great Recession was experienced from December 2007 to June 2009 as it was during this time that the US experienced its greatest economic slowdown

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