Impact of the Reinvestment Act of 2009

  The goal of US expansionary policy was to stimulate the country's economy to increase GDP.  The American Recovery Act of 2009 helped unemployed individuals, families, veterans, and homebuyers with credits.  Many of the policies clearly created incentives for people to spend money.  They hoped that this would help the economy recover from the recession.  As consumption increased, RGDP should also increase as consumption is an additive component of the economic indicator.
  As GDP falls, people lose faith in the economy in an attempt to save money as the economy is clearly not doing well.  They fear that spending money would not be smart in times of economic downturn. As a result of this, the economy suffers even more, resulting in even less people spending money.  This cyclical process is incredibly difficult for any economy.  This act was designed to create incentives for people in order to break the cycle of reduced consumption.  This expansionary policy was designed to help both households and businesses recover with the reinsurance that the government would be there to help. Policies like the 2009 Act have occurred in the past.  FDR's New Deal in the 1930's used government programs in order to create services and programs to help the economy recover.  Similar practices used during the most recent recession were clearly models, at least partly, on the efforts during this time period.
  Several incentives were created for both individuals and firms.  Incentives for individuals include educational benefits, Earned Income Tax Credit, energy efficiency credits, Home-buyer credits, and vehicle purchase credits.  All of these encompass the idea of increase consumption should help "stimulate" or expand the economy.  Increasing people to buy homes and cars is also incredibly important for the economy and helping individuals afford these allows them to spend excess money on other forms of consumption.  Incentives for firms include energy efficiency incentives, municipal bond programs, and work opportunity tax credit.  These incentives were designed to create jobs through construction projects as well as give tax credits for veterans and "disconnected youth".
  The reduction of consumption was seen through the economic recession.  Due to this, aggregate demand lowered considerably, leading to lower prices and higher unemployment rate in the short term.  The expansionary policy was designed to increase consumption.   This increase in consumption resulted in increasing aggregate demand to raise prices, lower unemployment, and increase productivity.
  The policies have seemed to help reduce unemployment and increase RGDP.  It was an incredible investment of $830 billion.  However, due to the economic factors being promising after the Act was enacted, it seems to have been worth it.  Even with the increase in government spending due to the stimulus, RGDP still seems to be higher in the long run then it would be otherwise. It still needs to be asked if the economy would have recovered by itself and whether government intervention was entirely necessary.  Overall, the expansionary policy enacted seemed to increase aggregate demand to its previous levels, increasing RGDP and prices while decreasing the employment rate.

The American Recovery and Reinvestment Act of 2009: Information Center. (n.d.). Retrieved April 26, 2016, from https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center