Download Essay q Q uestions for Chapter 5

Essay questions for Chapter 5
1. What was the response of the US Government and the Fed to the Subprime Mortgage
Crisis? Briefly discuss the three fiscal stimuli plans and the three monetary programs
adopted to fight the recession.
2. Discuss the Economic Stimulus Act of 2008, the Bush Tax Rebates. Was this fiscal
program effective in preventing the financial crisis from spreading? In order for the tax
rebate program to be effective in raising GDP, what was the expected behavior of the
individuals and families that received the rebates?
3. Explain if it is possible to accurately evaluate the separate effects of the US monetary and
fiscal policies to fight the Great Recession. Furthermore can the separate effects of the fiscal
and monetary programs be identified and measured? If such analysis of breaking down the
separate monetary and fiscal effects is not possible, evaluate the effectiveness of the jointlaunched fiscal and monetary policies in resolving the crisis.
4. News media nowadays often talk about orthodox and unorthodox monetary policy.
Explain the meaning of the two terms and state what constitutes orthodox and unorthodox
monetary policy.
5. Explain what is the Obama fiscal plan? When it was launched? How large was it? Which
sector of the economy it covered? Was the Obama stimulus plan effective in increasing
GDP? If not, discuss why not.
© 2016 George K. Zestos
6. Discuss the short-term liquidity programs launched by the Fed to reverse the Great
Recession. Explain these programs. Did these programs help the US economy? If yes, how?
7. Quantitative Easing is the last monetary program adopted by the Fed to fight the crisis.
Discuss the three QE programs and their effects on the US economy. Explain also the Fed’s
adopted exit policy from the QE. Do you believe that there may be a problem for the Fed to
exit from this policy?
Suggested class debates
1. The US government and the Federal Reserve adopted extraordinary fiscal and monetary
policies to help the US economy recover from the Great Recession. The class debates
whether such extraordinary expansive policies were necessary. Could the US have recovered
from the crisis without the mega fiscal and monetary stimuli programs, but simply with a
more moderate approach?
2. One of the short-term liquidity programs launched by the Fed was lending dollars to
foreign central banks. The class debates whether such a program was necessary and
beneficial to the US economy or simply was exclusively provided protection to foreign
economies.
3. Class debates the cost and benefits of the QE monetary policy. Class should divide into
two groups. Students in the first group support the launching of QE and prepare arguments
to defend this monetary program. The second group of students is skeptical about the
beneficial effects of QE in the long run and argues against it.
© 2016 George K. Zestos
4. Several economists and other analysts criticized the US government and the Fed, because
the Fed bailouts and the government programs did not achieve the intended objectives of
increasing loans and spending. The class debates the validity of such criticism. Do you
believe that a few of the programs were more successful than others? If yes, which ones?
5.
A sequence of large government deficits during and after the Great Recession to cope
with the crisis resulted in sharp increases in the public debt to GDP ratio. Such an increase in
US public debt raised concerns about fiscal stability. Class debates these concerns by
bringing arguments about whether the US public debt is sustainable. Include in the debate
topics such as: sequestration, fiscal cliff, or the concerns of the Tea Party, regarding US
public debt.
© 2016 George K. Zestos