Fed's Operation Twist & Quantitative Easing

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Running head: FED’S OPERATION TWIST & QUANTITATIVE EASING
FED’S OPERATION TWIST & QUANTITATIVE EASING
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1FED’S OPERATION TWIST & QUANTITATIVE EASING
Table of Contents
1. Classify the U.S. economic system..........................................................................................2
2. What were the immediate causes of the significant downturn (commonly referred to as the
great recession of 2008)?.................................................................................................................2
3. What has the U.S. government attempted to do to correct the situation?................................3
4. Were the government’s steps effective? Why not, or how so?................................................5
References........................................................................................................................................7

2FED’S OPERATION TWIST & QUANTITATIVE EASING
1. Classify the U.S. economic system
Economic system refers to the platform within a country through which government
distribute resources as well as exchange goods and services through trade. There are many forms
of economic system throughout the world. An economic system may be a mixed economy, a
market economy, a traditional economy or a command based economy. The economic system of
United States of America can be referred to as purely laissez-faire capitalist economy. The aspect
of laissez-faire, reveals that in the economic system of the USA transaction of goods and services
takes place within the private without much intervention by the government. Government may
intervene within an economy through regulation, privileges, providing subsidies as well as
creating tariff barriers (Angelo, 2017). Along with that it is also regarded as a mixed economic
system which have both the elements of a free market economy as well as government have
authority to monitor and control the centrally planned economic system. Due to this reason the
classification of the economic system of USA should be considered to be a mixed economic
system where the government as well as the privately owned businesses have significant roles.
2. What were the immediate causes of the significant downturn (commonly referred to
as the great recession of 2008)?
By 30th December, 2008 the Case – Shiller home price index reflected historically the
largest drop in price where the credit crisis took place due to bursting of the housing bubble.
The financial crisis that took place in USA by 2008 can be regarded as the subprime
mortgage crisis where formation of housing bubbles took place and the crash of the real
estate and housing debt market led to recession that is inclusive of international trade
imbalances. It was being found that the banks have sold too many of the mortgage backed
securities that could have been supported by good mortgages. The banks were found to sell