In response to the recession of 2008-2009, the fiscal policy of the federal government was
A) highly expansionary, and this Keynesian stimulus promoted a rapid recovery.
B) highly expansionary, but this was largely offset by the Fed's restrictive monetary policy
C) highly restrictive, but this was largely offset by the Fed's highly expansionary monetary policy
D) highly expansionary, but the unemployment rate nonetheless remained high during 2010 and 2011

Question

In response  to the recession of 2008-2009, the fiscal policy of the federal government was
A) highly expansionary, and this Keynesian stimulus promoted a rapid recovery.
B) highly expansionary, but this was largely offset by the Fed's restrictive monetary policy
C) highly restrictive, but this was largely offset by the Fed's highly expansionary monetary policy
D) highly expansionary, but the unemployment rate nonetheless remained high during 2010 and 2011

Quizplus · Accepted Answer

The government's fiscal policy during the recession was highly expansionary, with significant increases in government spending and tax cuts. However, the unemployment rate remained high in the years following the recession. This suggests that while the fiscal policy may have provided some stimulus to the economy, it was not enough to fully counteract the effects of the recession. The Fed's monetary policy was also expansionary during this time, but its impact may have been limited by factors such as a lack of demand for credit and the lingering effects of the housing market collapse.

In Response to the Recession of 2008-2009, the Fiscal Policy of the Federal