Why did Alan Greenspan receive criticism during the 2008 financial crisis and recession?
A) Critics argue that Greenspan should have tried to control the rise in AD by reducing the money supply.
B) Critics argue that Greenspan should have put a cap on home values.
C) Critics argue that Greenspan left the Fed without any direction as to monetary policy.
D) Critics argue that Greenspan should have increased the money supply to lower house price inflation.

Question

Quizplus · Accepted Answer

Critics argue that Greenspan should have tried to control the rise in AD by reducing the money supply. Many economists and analysts blame Greenspan's policies during his tenure as Federal Reserve chairman for contributing to the 2008 financial crisis and subsequent recession. They argue that his decision to keep interest rates low and allow banks to engage in risky lending practices led to a housing bubble, which eventually burst and triggered the global financial crisis. Some argue that he should have tried to control the rise in aggregate demand by reducing the money supply, rather than allowing it to fuel excessive lending and investment.

Why Did Alan Greenspan Receive Criticism During the 2008 Financial