2. In response to the 2008 crisis, the Federal Reserve engaged in many extraordinary measures, such as cutting the inter

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2 In Response To The 2008 Crisis The Federal Reserve Engaged In Many Extraordinary Measures Such As Cutting The Inter 1 (34.18 KiB) Viewed 16 times

2. In response to the 2008 crisis, the Federal Reserve engaged in many extraordinary measures, such as cutting the interest rate to 0% and engaging in multiple rounds Quantitative Easing-effectively increasing the money supply drastically. However, recovery was sluggish and the economy did not return to its pre-crisis level of real GDP until the fourth quarter of 2010 - three years after the official start of the recession. Explain why it is monetary policy alone may be ineffective at restarting an economy in the midst of a recession. I