HAVE ECONOMIC POLICIES SUCCEEDED IN ELIMINATING BUSINESS CYCLES?
The main goal of monetary and fiscal policies was to stabilize the macroeconomy—reducing or eliminating economic fluctuations or business cycles (as they are commonly known). Business cycles, however, have not been conquered to the fullest extent. After all, the most recent downturn ended only in 1992. Business cycles have been with the U.S. economy for a long time. After the Great Depression of the 1930s, it was realized that the government should use macroeconomic policies—monetary and fiscal policies—to manipulate the level of aggregate demand and to stabilize the economy around full employment with price stability. One of the two macroeconomic policy instruments, fiscal policy, is conducted by the Congress and the president. The conduct of monetary policy is left to the Federal Reserve Bank, an independent federal institution. The U.S. experience has shown that the burden of stabilizing the economy has fallen disproportionately on the Federal Reserve—fiscal policy is said to be slo
