A recent study from the National Bureau of Economic Research examined what people did with the $1,200 per-person stimulus payments distributed the US in April 2020. On average people said they spent about 40 percent of the total dollar amount they received, with the remaining 60 percent of the money split roughly equally between saving and paying down debt. Suppose that stimulus payments totaled $US
A recent study from the National Bureau of Economic Research examined what people did with the $1,200 per-person stimulus payments distributed the US in April 2020. On average people said they spent about 40 percent of the total dollar amount they received, with the remaining 60 percent of the money split roughly equally between saving and paying down debt. Suppose that stimulus payments totaled $US
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![A recent study from the National Bureau of Economic
Research examined what people did with the $1,200
per-person stimulus payments distributed the US in
April 2020. On average people said they spent about
40 percent of the total dollar amount they received,
with the remaining 60 percent of the money split
roughly equally between saving and paying down
debt. Suppose that stimulus payments totaled $US
100 billion.
a. If the tax rate is equal to 0.30 and the marginal
propensity to import 0.10, what is the short run effect
of the stimulus program on GDP?
b. How might the long-run effect of the stimulus
policy differ from the short-run effect?
c. Inflation in the US in 2020 was about 0.62 %. Some
people fear that inflation will increase in 2021 and
ahead. Give one argument that supports this fear.
and one argument against.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd07bfc30-ff58-4435-a5b9-2566fe2eb4ac%2F27e6555b-3958-407e-9f5e-da4f0f1e3fae%2Fth6o8ng_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A recent study from the National Bureau of Economic
Research examined what people did with the $1,200
per-person stimulus payments distributed the US in
April 2020. On average people said they spent about
40 percent of the total dollar amount they received,
with the remaining 60 percent of the money split
roughly equally between saving and paying down
debt. Suppose that stimulus payments totaled $US
100 billion.
a. If the tax rate is equal to 0.30 and the marginal
propensity to import 0.10, what is the short run effect
of the stimulus program on GDP?
b. How might the long-run effect of the stimulus
policy differ from the short-run effect?
c. Inflation in the US in 2020 was about 0.62 %. Some
people fear that inflation will increase in 2021 and
ahead. Give one argument that supports this fear.
and one argument against.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education