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how might a recession combined with a financial crisis, as occurred in 2008-2009, complicate the job of policy makers? explain how a recession combined with a financial crisis, which conspires to cause an epoch-making fall in aggregate demand, impacts output, employment, and prices, and moves the macroeconomy away from policy makers’ three principal policy goals. Next, explain why the presence of a financial crisis would require the use of a lender of last resort as a prerequisite for using monetary and fiscal policy to expand aggregate demand. If there are no complications, explain how policy makers could stop the financial crisis and end the recession to achieve their three policy goals.
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