4-- Refer to the article to answer two questions.FRONT PAGECongress OKs $2 Trillion Aid PackageWashington, D.C. Congress approved a $2.2 trillionfiscal package to help cushion the blow of theCOVID-19 shutdowns. With the unemployment rateexpected to reach as high as 20 percent in the nextcouple of months, Congress acted swiftly toauthorize massive relief. The Corona Aid, Relief, andEconomic Security (CARES) Act includes:Recovery Rebates: $293 billion in direct paymentsto individuals. The rebates are $1,200 per person,plus an additional $500 each for children under theage of 17. Payments will be directly deposited intotaxpayer accounts in April.|- Unemployment Benefit Supplements: $268 billionis authorized for federal supplements to stateunemployment benefits. The supplement is equal to$600 a week, over and above each state's regularweekly benefit. The supplements are authorized for16 weeks.- Payroll Protection Program: The PPP will provideloans to small businesses to keep employees on theirpayroll. If a business uses the PPP loan to retainemployees for four months, the loan may beforgiven. Initial funding for the PPP is $377 billion.Other provisions in the CARES Act provide moneyfor hospitals, state and local governments, COVID-19research, suspension of student loan payments,disaster relief, and emergency social and healthservices. CARES is expected to act as a lifeline to 4- G.Unemployment Benefit Supplements: $268 billionis authorized for federal supplements to stateunemployment benefits. The supplement is equal to$600 a week, over and above each state's regularweekly benefit. The supplements are authorized for16 weeks.- Payroll Protection Program: The PPP will provideloans to small businesses to keep employees on theirpayroll. If a business uses the PPP loan to retainemployees for four months, the loan may beforgiven. Initial funding for the PPP is $377 billion.Other provisions in the CARES Act provide moneyfor hospitals, state and local governments, COVID-19research, suspension of student loan payments,disaster relief, and emergency social and healthservices. CARES is expected to act as a lifeline tofamilies and businesses whose incomes havevanished in the coronavirus shutdowns.Source: Media reports of March 27-30, 2020.If the MPC in 2020 was 0.9,a. how much would consumption increase initially as a result of the recovery rebates?billionb. what would the ultimate impact of the recovery rebates be on total spending?billion%24

Given:- MPC=0.9 Recovery rebate=$293 billion in direct payment To calculate:- Rise in consumption=?…

If the MPC in 2020 was 0.9, a. how much would consumption increase initially as a result of the recovery rebates? $4 billion b. what would the ultimate impact of the recovery rebates be on total spending? billion

If the MPC in 2020 was 0.9, a. how much would consumption increase initially as a result of the recovery rebates? $4 billion b. what would the ultimate impact of the recovery rebates be on total spending? billion

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 5PA

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