American Recovery and Reinvestment Act (2008)

Definition

This was a law passed by the U.S. Congress in response to the Great Recession of 2008. It aimed to stimulate economic growth through investments in infrastructure, education, health, and renewable energy.

Analogy

Think of the economy as a car that's run out of gas during a road trip. The American Recovery and Reinvestment Act is like someone coming along with a jerry can full of fuel (in this case, money) to get the car running again so it can continue on its journey.

Related terms

Great Recession: A severe worldwide economic crisis that took place from 2007-2009. It was sparked by a financial crisis due to subprime mortgages.

Stimulus Package: A coordinated effort by the government to increase spending and investment to "kickstart" an economy during a downturn.

Infrastructure Investment: Money spent on physical systems such as roads, bridges, water supply which are essential for functioning of an economy.