1. The Multiplier and Fiscal Policy: one of the programs to combat the economic effects of the recession and pandemic was the CARES Act passed in March 2020. One of the provisions of the CARES act was a relief check of $1200 per adult and $500 per dependent child. These payments were actually advance rebates on 2020 taxes and so the payments came from the IRS. This tax cut distributed about $300 billion to most, but not all of the U.S. population. Major exceptions included families with undocumented members (which invalidated the whole family, even those who were legal residents or U.S. citizens), dependent adults (which invalidated many college students as well as seniors living with their children). The program was phased out for individuals making more than $75,000 and married couples earning more than $150,000. Which of the following statements is correct about the multiplier effect of this part of the CARES act? Group of answer choices The multiplier effect would be greater than an equal dollar increase in government purchases. The multiplier effect would be less than an equal dollar increase in government purchases. The multiplier effect would be the same as an equal dollar increase in government purchases. The multiplier effect of tax cuts is zero, only government purchases have a multiplier effect.
1. The Multiplier and Fiscal Policy: one of the programs to combat the economic effects of the recession and pandemic was the CARES Act passed in March 2020. One of the provisions of the CARES act was a relief check of $1200 per adult and $500 per dependent child. These payments were actually advance rebates on 2020 taxes and so the payments came from the IRS.
This tax cut distributed about $300 billion to most, but not all of the U.S. population. Major exceptions included families with undocumented members (which invalidated the whole family, even those who were legal residents or U.S. citizens), dependent adults (which invalidated many college students as well as seniors living with their children). The program was phased out for individuals making more than $75,000 and married couples earning more than $150,000.
Which of the following statements is correct about the multiplier effect of this part of the CARES act?
Group of answer choices
The multiplier effect would be greater than an equal dollar increase in government purchases.
The multiplier effect would be less than an equal dollar increase in government purchases.
The multiplier effect would be the same as an equal dollar increase in government purchases.
The multiplier effect of tax cuts is zero, only government purchases have a multiplier effect.
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