Question
3. In response to the pandemic recession of 2020, the federal government enacted a number of fiscal policy changes. A. How have these fiscal policy
3. In response to the pandemic recession of 2020, the federal government enacted a number of fiscal policy changes.
A. How have these fiscal policy actions affected the level of real GDP and the unemployment rate? In your answer, explain the process by which fiscal policy impacts real GDP and unemployment.
B. Why would these fiscal policy changes be more likely to increase inflation in 2021 than in 2020?
C. How did the fiscal policy in response to the pandemic recession differ from fiscal policy response following the Great Recession? How were these different policy approaches reflected in the pace of the recoveries that followed each of these recessions?
D. How did these fiscal policy changes impact the budget deficit and why might this cause interest rates to increase in 2021?
E. Why might it not cause interest rates to increase?
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