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Discuss and describe the responsibilities of the federal government during an economic crisis. Is there a danger that assistance will lead to dependence?

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According to the Constitution, the government is not legally required to do anything in an economic crisis; however, since the public associates economic prosperity with elected officials, these officials often feel obligated to do something in order to stimulate a sluggish economy. One of the most common things that the federal government does is to cut interest rates at the federal level. This lowers the prime rate and allows banks to make loans at cheaper rates. The hope is that this encourages consumers to buy more big-ticket items that stimulate the economy, such as homes and cars. The downside to this is that it does not encourage saving, and it can also lead to inflation.

The government can also engage in public-works programs; this...

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