1. Starting in March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided Economic Impact Payments of up to $1,200 per adult for eligible individuals and $500 per qualifying child under age 17. The payments were reduced for individuals with adjusted gross income (AGI) greater than $75,000 ($150,000 for married couples filing a joint return). For a family of four, these Economic Impact Payments provided up to $3,400 of direct financial relief.

The COVID-related Tax Relief Act of 2020, enacted in late December 2020, authorized additional payments of up to $600 per adult for eligible individuals and up to $600 for each qualifying child under age 17. The AGI thresholds at which the payments began to be reduced were identical to those under the CARES Act.

The American Rescue Plan Act of 2021 (American Rescue Plan), enacted in early March 2021, provided Economic Impact Payments of up to $1,400 for eligible individuals or $2,800 for married couples filing jointly, plus $1,400 for each qualifying dependent, including adult dependents.

a. Use Aggregate Demand-Aggregate Supply analysis to explain the effects of these Economic Impact Payments on equilibrium GDP, the unemployment rate, and the inflation rate.

b. In April 2020, the unemployment rate was 14.7%; in December 2020, the unemployment rate was 6.7%; and in March 2021, the unemployment rate was 6.0%. Explain whether the Economic Impact Payments were "A Good Idea" in 2020 and 2021.