1. Under the 2020 CARES Act, the U.S. government distributed checks of $1,200 per qualifying individual. Married couples making up to $150,000 and single individuals making up to $75,000 were eligible for the full $1,200. Those making above these amounts - up to $198,000 (married) or $99,000 (single) - were eligible for a smaller stimulus check. The government hopes that stimulus checks have a strong multiplier effect.
   1. Define the 'multiplier effect'. What is the logic behind the multiplier?

1. What if stimulus checks were limited to those making around $50,000? Would the multiplier likely be higher or lower than the multiplier for the stimulus checks as described above? Explain your reasoning.

1. The textbook (Section 16.4 from assigned readings) notes that: "We would expect the tax multiplier to be smaller in absolute value than the government purchases multiplier." Given this, which of these two policies - decreasing taxes or increasing government purchases - might the government favour to stimulate GDP (considering a COVID-19 pandemic type shock to GDP) in the short run? What long-run considerations might temper this choice? Justify your answers.