Where the words come from
The Keynesian, classical and neoclassical perspectives; the 1929 crash, the collapse of consumption and investment and the negative multiplier; deflation of 6.7 per cent a year in 1930 to 1933; government spending of 4 per cent of GDP in 1929; Depression unemployment; Keynes on unchanged capacity and on government moving aggregate demand; the 2008 response (interest rates to near zero, quantitative easing, the 830 billion dollar package and state and local offsets); Blinder and Zandi; the record of the rounds of quantitative easing; reserves nearly quintupling without inflation; the counterfactual problem; the key terms for expansionary fiscal and monetary policy — Principles of Economics 2e, OpenStax, licensed CC BY 4.0. https://openstax.org/books/principles-economics-2e/pages/25-2-the-building-blocks-of-keynesian-analysis and https://openstax.org/books/principles-economics-2e/pages/30-4-using-fiscal-policy-to-fight-recession-unemployment-and-inflation and https://openstax.org/books/principles-economics-2e/pages/26-3-balancing-keynesian-and-neoclassical-models and https://openstax.org/books/principles-economics-2e/pages/25-key-terms and https://openstax.org/books/principles-economics-2e/pages/28-key-terms and https://openstax.org/books/principles-economics-2e/pages/24-1-macroeconomic-perspectives-on-demand-and-supply and https://openstax.org/books/principles-economics-2e/pages/26-1-the-building-blocks-of-neoclassical-analysis and https://openstax.org/books/principles-economics-2e/pages/28-5-pitfalls-for-monetary-policy and https://openstax.org/books/principles-economics-2e/pages/30-5-automatic-stabilizers and https://openstax.org/books/principles-economics-2e/pages/21-2-patterns-of-unemployment and https://openstax.org/books/principles-economics-2e/pages/25-1-aggregate-demand-in-keynesian-analysis and https://openstax.org/books/principles-economics-2e/pages/25-4-the-keynesian-perspective-on-market-forces and https://openstax.org/books/principles-economics-2e/pages/28-4-monetary-policy-and-economic-outcomes. Changes: Condensed and paraphrased from several sections; the US Federal Reserve kept and glossed as the US central bank because the specification asks for the US response; "Blinder and Zandi ... GDP decline would have been significantly more" given as the fall in GDP being significantly larger; the 830 billion dollar figure from 30.4 written in words for the currency; "nearly quintupled" kept from 28.5 with "probably due to some of the hurdles" given as banks holding the new money, which is the excess-reserves hurdle of the same section; the Troubled Asset Relief Program, the car makers and the job-loss estimate dropped; the three concept cards condense 26.1 (classical), 25.2 (Keynesian) and 28.5 (the steady money-growth rule and the deflation passage); the label "monetarist view" and the card's one-line statement of it are ours, as 2e does not use the word; the chart is ours, after 2e figure 30.11; British spelling.
Britain in the 1930s (approximate fiscal balance from 1929 to 1938, Keynes blaming a tightening for the 1932 dip, leaving gold, real short-term interest rates, house building, no UK banking crisis, recovery two years before the US) and Cable's 2012 argument; Bank Rate from October 2008 to March 2009, and the UK's use of quantitative easing in Cable's account; the UK fiscal stimulus, its size and make-up, borrowing in 2009-10, the share caused by the stimulus, its withdrawal from 2010-11 and the multiplier assumption — Vince Cable, Delivering growth while reducing the deficit, speech, GOV.UK, 18 June 2012; Bank of England Database, Official Bank Rate (IUDBEDR); Office for Budget Responsibility, Working paper No. 7, Crisis and consolidation in the public finances (Riley and Chote, September 2014). All reused under the Open Government Licence v3.0. https://www.gov.uk/government/speeches/delivering-growth-while-reducing-the-deficit and https://www.bankofengland.co.uk/boeapps/database/ and https://obr.uk/docs/dlm_uploads/WorkingPaper7a.pdf. Changes: Paraphrased, not quoted. Cable's figures kept as his account and attributed to him; his unemployment comparison left out because it uses a different measure from the insured-worker count used elsewhere on the site. Bank Rate read off the daily series (5 per cent up to 7 October 2008, cut to 4.5 per cent on 8 October, 0.5 per cent from 5 March 2009). OBR paragraphs 1.6, 1.7, 3.53, 3.54 and the VAT dates in chapter 4: 157.3 billion pounds or 11 per cent of GDP in 2009-10; the stimulus slightly under 1.5 per cent of GDP by 2009-10, only around 1.3 per cent of GDP of the unexpected rise in 2009-10 borrowing came directly from the stimulus; VAT 17.5 to 15 per cent for 13 months from December 2008, back to 17.5 per cent in 2010-11 and 20 per cent from January 2011. British spelling; the 13-month VAT cut, the £3 billion of capital spending brought forward (OBR 3.54) and the OBR's multiplier assumption (chapter 3) kept, the half-and-half split of the stimulus dropped for length.
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