Since the 2008 global financial crisis, the UK government has implemented various policies to combat recession and stimulate economic growth. This essay will examine the effectiveness of fiscal and monetary policies used since the crisis to achieve the four macroeconomic objectives. Additionally, I will provide my views on how the UK government can best implement these policies. Monetary policy affects aggregate demand by changing the supply or cost of money. One of them is changing the interest rate. By reducing the interest rate, it encourages consumers and businesses to borrow and spend or invest instead of saving their money. As a result, the money supply increases. When there is more money, it causes the demand curve for goods and services to shift, which will lead to inflation and higher production. Please refer to Appendix A. Higher output requires factors of production, which will lead to lower unemployment rates. Since the global financial crisis of 2008, the interest rate was reduced from 5.25% to 0.5% within a year. The interest rate was fixed at 0.5% on March 5, 2009 and since then; the interest rate remained unchanged. Please see Appendix B. The rate reduction was intended to encourage consumers to borrow and spend in order to keep the economy growing. As the household spending chart shows, household spending declined during the recession period and only began to recover during the second quarter of 2009. This shows that the low interest rate was able to stimulate demand, thereby leading to economic growth. Please refer to Appendices C and D. There is also a direct relationship between spending and inflation. In the 3rd quarter...... middle of paper...... economy. Available at: http://www.tradingnomics.com/united-kingdom/gdp [Accessed 30 March 2014]Treanor, J. (2011) Autumn Statement: Loan scheme may leave small businesses with just £34 per months better [Online]. The Guardian. Available at: http://www.theguardian.com/business/2011/nov/29/small-business-lending-fund-qe-cash [Accessed 29 March 2014] UK Debt Management Office. (undated) Warranty programs [Online]. UK Debt Management Office. Available at: http://www.dmo.gov.uk/index.aspx?page=CGS/NLGS2012 [Accessed 30 March 2014]UK Debt Management Office. (2012) Procurement Notice: Changes to the Government's National Loan Guarantee Scheme [Online]. UK Debt Management Office. Available at: http://www.dmo.gov.uk/documentview.aspx?docname=CGS/press/2012-07-20NLGSMarketNoticechangesJuly.pdf&page= [Accessed April 1 2014]