Th2.6: Policy Responses in the UK and USA

Question 1

What were both governments forced to do and why?

Answer 1

nationalise banks and building societies and guarantee savers their money in order to prevent the chaos of a collapsed banking system

Question 2

What is an example of this?

Answer 2

the British Government buying Northern Rock and most of Royal Bank of Scotland and Lloyds Bank

Question 3

What policies did the UK use?

Answer 3

expansionary monetary policies with record low interest rates and quantitative easing

Question 4

What did the Bank of England say the quantitative easing led to?

Answer 4

lower unemployment and higher growth than would otherwise have been the case

Question 5

What policies did the USA use?

Answer 5

a more expansionary fiscal policy and this is perhaps why it recovered faster

Question 6

What happened in 2010?

Answer 6

the UK prioritised reducing National Debt over providing a fiscal stimulus, which the USA only did in 2013