Extended Essays 2021

time. On December 2018, the Reserve interest rate was reduced to 0.25% (Cheng, et al.,

2021). This time the Federal Reserve rate was reduced by 50 basis points to 1.10% on 3

March. On 15 March, the reserve rate continued to be cut by 100 basis points to 0.10%, and

eventually even to 0%. Therefore, to provide financial institutions with enough capital and

promoting credit flows to households and businesses.

Compared with the crisis in 2008, the Federal Reserve lowered the minimum target of the

federal funds rate to zero in the short term, which was not a significant decrease. If adjusted

again, the Fed could enter the era of negative interest rates. The unlimited quantitative easing

policy launched by the Federal Reserve and the establishment of some new policy

instruments have wide coverage and quick effect, which, to a certain extent, eased the

pressure of money circulation caused by the market volatility and asset sales. However, the

current epidemic is still ongoing, the number of confirmed cases in the United States is still

rising, and economic and financial trends remain uncertain. Compared with the financial

crisis and the coronavirus epidemic in 2008, the Federal Reserve has an overused monetary

policy and has little room for follow-up monetary policy.

3.3 Recovery of the real GDP

Table 3 (Rohrer, et al., 2021): The Real Gross Domestic Product change (in billion) for the

2008 economic crisis

Year

Q1

Q2

Q3

Q4

2007

15478.956

15577.779

15671.605

15767.746

2008

15702.906

15792.773

15709.562

15366.607

2009

15187.475

15161.772

15216.647

15379.115

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