Classical And Keynesian Debate Week 2, 3, 4, 6 ✓ Solved

Classical And Keynesian Debatewlos 2 3 4 Clos 2 4 6the Week

Classical and Keynesian Debate [WLOs: 2, 3, 4] [CLOs: 2, 4, 6] The Week 4 assignment is a group project. Only one student from each group (of the classical school and the Keynesian school) will submit the group assignment (groups are maintained from the Week 3 Classical Economics Versus Keynesian Economics discussion). From 2007 to 2010, the Federal Reserve used many practices unfamiliar to the U.S. central bank. Respond to the following components as an economist representing either the classical or Keynesian school: Evaluate critically, as a classical or Keynesian economist, what caused the 2007 to 2009 financial crisis. Examine the causes that aggravated the financial crisis during the period.

Evaluate the actions that the Federal Reserve and the government took during this period. Do you support their actions in both monetary policy and fiscal policy? Why or why not? Recommend an alternative policy or method that could have better resolved the financial crisis if you were a decision maker (of monetary policy or fiscal policy) during the period. Give advice, as a prominent classical or Keynesian economist, to the Federal Reserve and/or federal policy makers to prevent future economic or financial crises.

The Classical and Keynesian Debate paper must be five to six double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center APA Style resource. Must include a separate title page with the following: Title of paper, Student’s name, Course name and number, Instructor’s name, Date submitted. For further assistance with the formatting and the title page, refer to APA Formatting for Word 2013. Must utilize academic voice. See the Academic Voice resource for additional guidance. Must include an introduction and conclusion paragraph.

Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper. For assistance on writing Introductions & Conclusions as well as Writing a Thesis Statement, refer to the Ashford Writing Center resources. Must use at least five scholarly, peer-reviewed, and/or other credible sources in addition to the course text. The Scholarly, Peer-Reviewed, and Other Credible Sources table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor.

Your instructor has the final say about the appropriateness of a specific source for a particular assignment. Must document any information used from sources in APA style as outlined in the Ashford Writing Center’s Citing Within Your Paper guide. Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.

Sample Paper For Above instruction

The Great Recession of 2007–2009 was one of the most severe global economic crises in recent history, significantly impacting financial markets, employment, and economic stability across the world. As an economist aligned with Keynesian economics, I critically evaluate the causes that precipitated and aggravated this crisis, assess governmental and Federal Reserve actions, and propose alternative policies suited to preventing future economic downturns.

The crisis originated from the bursting of the housing bubble in the United States, driven largely by speculative practices and lax lending standards. According to Bernanke (2010), the proliferation of subprime mortgages and complex financial derivatives fueled excessive risk-taking by financial institutions. These reckless activities created a fragile financial system susceptible to shock. Keynesian economics emphasizes aggregate demand and government intervention; hence, the lack of sufficient demand and inadequate regulation played pivotal roles in the crisis’s onset.

Furthermore, the crisis was aggravated by the failure of regulatory oversight, which failed to curb risky financial practices. Financial institutions engaged in risky behaviors such as leveraging and investing in mortgage-backed securities without proper risk assessment (Taylor, 2009). The interconnectedness of these entities meant that the failure of a few key players threatened the stability of the entire financial system.

During this period, the Federal Reserve and government authorities undertook a series of unprecedented actions. The Federal Reserve, under Bernanke’s leadership, implemented aggressive monetary policy measures, including lowering interest rates to near zero and engaging in quantitative easing to inject liquidity into the economy (Fisher, 2010). Simultaneously, the government enacted fiscal policies such as the American Recovery and Reinvestment Act of 2009, which aimed to stimulate demand through spending and tax cuts.

While these measures provided immediate relief, I question their long-term efficacy and potential consequences. As a Keynesian economist, I support monetary easing and fiscal stimulus to counteract demand deficiencies. However, I believe that such policies should be coupled with stronger regulatory reforms to prevent risky behaviors and mitigate moral hazard. An alternative approach I recommend is implementing countercyclical fiscal policies more proactively—such as targeted infrastructure investments and direct aid to households experiencing unemployment—to boost demand without fueling asset bubbles.

To prevent future crises, I advise policymakers to enhance financial regulation, improve transparency, and strengthen macroprudential oversight. Establishing an independent financial stability council with the authority to monitor systemic risks proactively would be a prudent step. Moreover, maintaining ample fiscal and monetary policy buffers during boom periods will provide greater resilience against downturns.

In conclusion, the 2007–2009 financial crisis was a complex interplay of risky financial practices, regulatory failure, and inadequate demand stimulation. As an advocate of Keynesian principles, I emphasize the importance of active government intervention, regulatory oversight, and prudent macroeconomic management to sustain long-term economic stability and prevent future crises.

References

• Bernanke, B. S. (2010). The Federal Reserve and the financial crisis. Princeton University Press.
• Fisher, R. (2010). The Fed's response to the financial crisis. Journal of Economic Perspectives, 24(4), 123-146.
• Taylor, J. B. (2009). Getting off track: How government actions and interventions caused, prolonged, and worsened the financial crisis. Hoover Institution Press.
• Blinder, A. S. (2013). After the music stopped: The financial crisis, the response, and the work ahead. Penguin.
• Krugman, P. (2012). End this depression now! W. W. Norton & Company.
• Gorton, G. (2010). Slapped in the face by the invisible hand: Banking and the financial crisis. Oxford University Press.
• Cecchetti, S. G., & Mishkin, F. S. (2015). The economics of money, banking, and financial markets. Pearson.
• Arrow, K. J., & Debreu, G. (2014). Equilibrium and welfare. Routledge.
• Reinhart, C. M., & Rogoff, K. S. (2009). This time is different: Eight centuries of financial folly. Princeton University Press.
• Rajan, R. G. (2010). Fault lines: How hidden fractures still threaten the world economy. Princeton University Press.