The American Recovery and Reinvestment act 2009

After any recession, like the Great Recession, the goal of policy makers is to expand GDP and stimulate economic growth. This is exactly what the goal of The American Recovery and Reinvestment act was aimed at. The Act includes several policies to stimulate economic growth. An example of this was the Homebuyers Credit. This is where if consumers would purchase a house by April 30, 2010 they would receive a credit of $8000. I believe policy makers were aiming to impact GDP growth. This impacts GDP growth in two ways. The first is that this credit may influence more people to buy homes. Therefor, increasing the investment section of GDP. I also believe that this stimulates the consumption component of GDP. This is because when people are receiving this $8000 they are more likely to spend more on other goods, which fall under consumption of GDP. Another example of this is "Money back for new vehicles." This states "Taxpayers who bought new cars and certain other new vehicles in 2009 can  deduct the state and local sales taxes they paid as well as other taxes and fees they paid in states with no sales tax." Basically what policy makers were attempting to do here is increase consumption spending and there for increasing GDP once again. 
As we discussed earlier these policies have a direct impact on GDP, but this is in two ways. The long term and the short term. If we examine the aggregate supply and demand curves. First off, these policies will give most likely give the people a higher amount of disposable income. For example the "Money back for new vehicles" is a tax cut, and we know that tax cuts allow people to take more than that would otherwise. This leads to higher consumption spending, as mentioned earlier, and higher consumption spending will result in an outward shifting aggregate demand curve. Because the AD curve shifts outward we will see a movement along the aggregate demand curve to meet this new demand and creating a new equilibrium point. Therefor over the short run we will notice an increase in GDP and an increase in prices. However, in the long run, this is not the case. Still examining the graph of aggregate supply and demand, we know that aggregate demand has a downward slope and short run aggregate supply has an upward slope. We also know the long run aggregate supply curve is vertical because it is determined by the economies stocks of labor, capital, natural resources, and the level of technology. This dictates to us that even though we will see increased GDP in the short run we will not see it in the long run. This also means that in the long run we will only see increases in prices or inflation.  The only way to see this increase in GDP is through a shift in the Long run aggregate supply curve. This is usually due to technological advances but can also be because of other things like increases or decreases in a population. Therefor, we can assume that the implementation of these policies most likely only impacted short run GDP rather than long run GDP.

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