Overview
Assessment Instructions
A colleague of yours is an Economics professor. She has asked you to write a report for her students about ways the government can interact with the economy. You’ve decided to use actions by the Federal Reserve and a government intervention program to illustrate the issue.
(Tip: Use charts and graphs to help illustrate data for the students. Only include charts or graphs from the Federal Reserve Bank of St. Louis FRED website if the data came from U.S. government sources, such as the Bureau of Economic Analysis or the Bureau of Labor Statistics.)
Create a two-part report.
Part 1: Federal Reserve
Choose 1 of the following topic areas related to the Great Recession:
- The housing price bubble, collapse, foreclosures, bailout of underwater mortgages
- Subprime mortgages and derivatives, bailout of FNMA, Freddie Mac, and AIG
- The banking industry crisis, bailout of commercial and investment banks
Write a 600- to 750-word analysis of 1 of the following corrective actions taken by the Federal Reserve:
- Quantitative easing
- Purchase of toxic assets from financial institutions
- Paying interest on reserve balances
Address the following in your analysis:
- Actions taken by the Federal Reserve to mitigate the crisis
- How the corrective action helped stabilize the financial system
- How the corrective action should prevent a similar crisis from happening
Part 2: Government Intervention Program
Analyze 1 of the following government intervention programs. Evaluate how your chosen program has adapted or struggled
to address increased demand (due to job loss and economic uncertainty). Consider both the immediate and long-term economic implications of the intervention.
- Countercyclical fiscal policies. These are programs that counter economic disruptions such as the housing bubble, the Great Recession, or the COVID-19 pandemic (example: the American Rescue Plan).
- U.S. agriculture support programs
- Assistance for low-income families (choose 1): housing vouchers; earned Income Tax Credit (including Child Tax Credit); supplemental Nutrition Assistance Program (SNAP)
- Low-income health care (choose 1): Medicaid (including Children’s Health Insurance Program); Affordable Care Act expansion
- Social insurance programs (choose 1): Old Age, Survivors, and Disability Insurance (OASDI); Medicare; Unemployment insurance
Write a 850- to 1,050-word summary of your analysis. Address the following in your summary:
- Analyze the arguments for your chosen government intervention versus those for market-based solutions. (Hint: See the information about market failures.)
- Examine who the government intervention has helped and who it has hurt.
- Examine externalities and unintended consequences of the intervention.
- Explain whether the cost of the intervention, as a share of GDP or the number of participants, is increasing, decreasing, or varying with the state of the economy. Your analysis should be based on the cost trend (or number of participants) since 2000 (or since the program started, if after 2000).
- Analyze credible economists’ opinions on the success or failure of the intervention.
- Recommend whether the program should be continued as is, discontinued, or modified based on your conclusions. Defend your recommendation.
Cite your sources.
- Make sure to give credit to any sources you use by including both in-text citations and a list of references. You can see how to do this in the APA 7 manual or in the University Library. Here's a quick example:
- In-text citation example: According to Hubbart (2023), resistance to change is . . .
- Reference example: Hubbart, J. A. (2023). Organizational change: The challenge of change aversion. Administrative Sciences, 13(7), 162. https://doi.org/10.3390/admsci13070162
- You don't have to follow this citation style perfectly, but it's important to show which ideas are yours and which come from other places when you're doing your assignments.
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