Actions taken by Government

In the days following the 9/11 attacks, the economic effects were unclear and extremely hard to predict. For this reason, the government was forced to take immediate actions to help limit the effect that the attacks would have on nation's already fragile economy. All flights were grounded and the stock market was shut down. The federal reserve liquidated all assets and shut down stock market to prevent bank run and panic

Fiscal Policy

--operated at a budget deficit

Fiscal policy allowed the government to provide additional funding for homeland security, and humanitarian programs. Immediately after the attacks, the president requested "emergency spending authority and appropriations for disaster relief, military operations and to fight the war on terrorism". 20 Billion dollars was spent on programs to support the airline industry and to help with military defense spending.

Monetary Policy

-Fed. reserve bought a number of government securities through open market operations.
-Fed. Reserve put $100 billion into the financial system each day immediately following the attacks.

The Rederal Reserve cut interest rates by 1/2 a percentage point on the first day markets were open after the attack

Economic Impact of 9/11