Macroeconomics Term Paper2.docx - Macroeconomics-Seeing Korea Governments Policies to overcome 2008 recession by IS-LM model a Abstract Global financial

Macroeconomics Term Paper2.docx - Macroeconomics-Seeing...

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Macroeconomics-Seeing Korea Government’s Policies to overcome 2008 recession by IS-LM model-a. AbstractGlobal financial crisis in 2008 have affected world economy. Started from United State, this crisis spread to whole world. Korea was no exception. For example, thefourth quarter GDP growth rate decreased dramatically in comparison with previous year(-3.3%), previous quarter(-4.6%). This kind of output decrease is the most remarkable decline since Korea’s 1997 IMF crisis. Output decrease means unemployment increase. The number of employed people decreased and real wage growth rate also decrease. In this situation, Korea’s new government enforce fiscal and monetary policy to support economic recovery. This report analyzes the short- run effect of policy by using IS-LM model. b. AssumptionThis report doesn’t consider other policy factors except for government purchasing and money supply because of easiness to analyzing real economy by IS-LM. For example, housing assistance, job assistance, student aid will not be

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