e) Economic crises

h) awareness of demand-side policies in the Great Depression and the Global Financial Crisis of 2008: different interpretations, policy responses in the US and UK

the effects of the Great Depression on the UK economy

• 25% unemployment rate in 1932

• 50% decrease in the value of exports in 1931

recovery policies during the Great Depression

• US monetary policy

  • Federal Reserve decreased the interest rate from 6% to 4%

• US fiscal policy

  • Roosevelt’s New Deal/WWII increased government expenditure and employment on infrastructure/defence projects

• UK monetary policy

  • Bank of England’s suspended use of the gold standard on bank notes depreciated the PS

• UK fiscal policy

  • 10% tariffs increased production and consumption

the effects of the Global Financial Crisis on the UK economy

• 8% unemployment rate in 2009

• 22% decrease in the value of exports in USD in 2009

recovery policies during the Global Financial Crisis

• US monetary policy

  • Federal Reserve decreased the interest rate eight times from 5.25% to 0.25%

  • three rounds of quantitative easing injected >$3tn into the money supply

• US fiscal policy

  • American Recovery and Investment Act injected >$787bn into the money supply

• UK monetary policy

  • Bank of England decreased the interest rate nine times from 5.75% to 0.5%

  • multiple rounds of quantitative easing injected >£375bn into the money supply

• UK fiscal policy

  • Conservative government switched from expansionary fiscal policy to austerity