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Responses To COVID Quiz.pdf

Responses-to-COVID-Quiz-.pdf
Preview of Responses to COVID Quiz
🔗 Source: econedlink.org
📊 Size: 270 KB
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Summary

Expansionary fiscal policy is used in response to crises like COVID-19 to increase real GDP. Examples of fiscal policy responses include $1200 stimulus checks, increased unemployment benefits, and government loans to small businesses. The Fed lowering target interest rates is not a fiscal policy response.

An individual's marginal propensity to consume (MPC) determines how much they spend when given a certain amount of money. As household income increases, the MPC may decrease. The spending multiplier increases as the MPC increases.

When evaluating fiscal policy effectiveness, factors to consider include the impact on aggregate demand, employment, and inflation. Economists advocate for a second stimulus check during the COVID-19 recession, arguing that targeting individuals earning less than $40,000 per year would be more effective in stimulating the economy, as they have a higher MPC and are more likely to spend the money immediately.

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Description

Expansionary fiscal policy is used in response to crises like COVID-19 to increase real GDP.

Technical Information

  • File Format: PDF
  • File Size: 270 KB
  • Pages: 2
  • Language: EN
  • Total Downloads: 223
  • Last Updated: 3 hours ago

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