Questions on Economics, the Recession, and the Federal Reserve

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Part 8 - A recession is typically defined as at least two consecutive quarters of economic decline in GDP. When this happens, unemployment tends to rise, personal income may drop, and the price of goods and services become volatile. Most agree that it is impossible to eliminate recession in a capitalistic economy, since it is so cyclic. Recessions may trim weak business and allow stronger ones to survive by employing techniques that improve quality and service. Recession does not mean depression; it simply means that there are peaks and valleys within the overall economic system. Now that economies are more global though, these dips have a far more reaching set of consequences. In most firms, however, recession may result in some lay-offs, but it also may mean greater attention to sustainability, cost-cutting, and a more lean and strategic approach to the individual product or service (Moffatt, 2009). Part 9 - The Federal Reserve System was created in 1913 to act as the central bank of the United States and to oversee the nation's monetary policy, regulate banking, and make financial systems stable. Over the past two years, though, the Fed has faced serious challenges as it responded to severe recessionary times. The TARP program was a new tool to provide capital to banks, as well as new programs to stabilize money market mutual funds and short term paper markets. TARP and TALF (Term Asset-Backed Securities Loan Facility) helped revive security markets and allow more
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