Why wasn't the stimulus passed in 2009 effective in reducing unemployment during the recession of 2009-10?
A) Congress cut the size of the final package, it was skewed toward tax cuts, and it was only 25% of the amount needed to restore GDP to full employment.
B) The administration mismanaged it-and it was much too large.
C) Fiscal policy is ineffective in a liquidity trap.
D) Tax cuts and interest rate cuts would have been effective, but they were politically undesirable.

Question

Quizplus · Accepted Answer

The stimulus package passed in 2009 was cut down in size, with a heavy emphasis on tax cuts rather than direct spending, and was only a fraction of the amount needed to fully restore the GDP and employment to pre-recession levels. Additionally, the package was not able to address the deep structural issues in the economy that caused the recession, such as a housing market collapse and excessive Wall Street risk-taking.

Why Wasn't the Stimulus Passed in 2009 Effective in Reducing