Multiplier Effect assignment help



Comment on the conclusions regarding the multiplier effect. Provide constructive critique, supporting your opinion by researching a source to back it up.

During the 2000's the aggregate expenditure was affected for a number of reasons including the Dotcom bust, 9/11 terror attack, Hurricanes Katrina and Rita, the housing market and sub-prime lending collapse, financial market crisis, as well as the recession that closed out the decade.

Under President George W. Bush, The Economic Growth and Tax Relief Reconciliation Act of 2001 was passed in order to help stimulate a stagnant economy (Amadeo, EGTRRA: The Economic Growth and Tax Relief Reconciliation Act of 2001, 2017). The idea was to give tax breaks and credits in order to create consumer spending and investing. The main drawback of the plan was the tax cuts were to be spread out through 2009 and would not have an immediate impact on the recession caused by the Dotcom bust. However, many would also argue the tax credits of $500-1000 added to fiscal irresponsibility that seemed to be prevalent during the decade.

That fiscal irresponsibility would be seen in the sub-prime lending practices of the mid-2000's that led to the housing market bubble bust and the subsequent financial crisis that contributed to the Great Recession during the latter part of the decade. In response to the housing crisis, Congress enacted the Emergency Economic Stabilization Act of 2008 which provided a $700 Billion bailout to help stabilize the housing and financial markets (EESA) (Emergency Economic Stabilization Act of 2008, 2008). Although enacted in 2010, the Frank-Dodd Act Wall Street Reform Act was in direct response to the dereliction and lack of oversight that led to the housing and financial crisis of the 2000's (Amadeo, What Is the Dodd-Frank Wall Street Reform Act?, 2017)

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