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To speed up the recovery from the Covid-19 pandemic, the U.S. Congress recently passed a $1.9 trillion economic relief package. The relief package includes $1

To speed up the recovery from the Covid-19 pandemic, the U.S. Congress recently passed a $1.9 trillion economic relief package. The relief package includes $1 trillion for households, with direct payments of $1,400 to all Americans. It also includes $415 billion to fight the virus and $440 billion for small businesses. Using the AD-AS framework, explain what will happen to output, unemployment, and the price level in the short run and in the long run. (Hint: Is the economy currently at the natural level of output?)

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