Why did Greenspan receive criticism during the 2008 financial crisis and the 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

Greenspan received criticism for not doing enough to control the rise in aggregate demand (AD) which led to inflation, especially in the housing market. Critics argue that Greenspan should have tried to reduce the money supply to slow down borrowing and spending which in turn could have stalled the housing bubble.

Why Did Greenspan Receive Criticism During the 2008 Financial Crisis