Extended Essays 2021

Table 7 (Statista Research Department, 2021): unemployment insurance benefit paid in the

U.S. for 2020 (in billion)

Year Jan Feb Mar Apr May Jun

Jul

Aug

Sep Oct Nov Dec

2020 --

--

--

--

-- 22.10 18.65 16.37 13.42 8.36 6.69 6.40

2021 5.63 5.08 5.37 4.10 3.95 3.98

--

--

--

--

--

--

4.0 Evaluation

There are differences in the causes of the two-economics crisis. The root cause of the

financial crisis in 2008 is the excessive debt caused by loose monetary policy. In 2008,

mainly due to the expansion of the real estate bubble, the Federal Reserve continued to raise

interest rates to break through the bubble and residents’ repayment ability declined, which

eventually triggered a global financial crisis (Bosco, 2020). In 2020, affected by the

coronavirus epidemic, economic activities will slow down, and both supply and demand will

decline. The epidemic has brought a serious impact is mostly on the real economy, and

economic growth has been hit hard. However, the underlying reason is that the asset bubbles

with high levels under the long-term policy of low-interest rates and high deficits have led to

the super scale increase of the stock market, and the stock market value is much higher than

the valuation. The outbreak caused the bubble to burst, the liquidity short, and the economic

depression to appear.

Therefore, the difference between the 2008 financial crisis and the 2020 outbreak is actually

the difference between the recovery of the real economy and the recovery of the financial

market. The financial market crash caused the 2008 financial crisis; thus, the policy needs to

be more cautious. Therefore, the use of monetary policy may not fully recover the economy.

15