Consider fiscal policy responses to the great financial crisis of 2008-09.
a. Explain the different fiscal policy responses in the United States and China to the Great Recession of 2008-09.
b. Explain whether the short-run policies in (a) are consistent with the longer-run goals of each country.

Question

Quizplus · Accepted Answer

The Answer is a.Arguably, the United States needs to increase savings and increase investment; China needs to decreases savings and investment and increase consumption. The responses to the Great Financial Crisis moved both countries in the opposite (wrong) direction relative to these long-run goals.
b.Arguably, the United States needs to increase savings and increase investment; China needs to decreases savings and investment and increase consumption. The responses to the Great Financial Crisis moved both countries in the opposite (wrong) direction relative to these long-run goals.

Consider Fiscal Policy Responses to the Great Financial Crisis of 2008-09