Question

How is the federal government using fiscal policy to respond to the economic impact of the Coronavirus?

Answer 1

Explanation:

The government has passed a $2 trillion dollar stimulus package. The stimulus package includes increased unemployment benefits (an additional $600 per week in additional to whatever benefits they are receiving from the state) for a maximum of 4 months. According to CNN,  "Under the plan as it was being negotiated, single Americans would receive $1,200, married couples would get $2,400 and parents would see $500 for each child under age 17. However, the payments would start to phase out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not qualify at all. The thresholds are doubled for couples." You can read more about the stimulus package here: https://www.cnn.com/2020/03/25/politics/stimulus-package-details-coronavirus/index.html The stimulus package also provides funding for hospitals and loans for small businesses.

In additional to the stimulus package, the Federal Resereve lowered the reserve requirement ratio to 0%. The reserve requirement ratio is how much money banks are required to keep, as opposed to loaning it out. During this time, the government is using expansionary fiscal policy, which is aimed to stimulate the economy to grow. The government is buying bonds during this time, which increases the money supply.