Claudia Sahm, an economist at the Federal Reserve, has proposed that when the U.S. economy enters a recession, once the unemployment rate has risen by at least 0.5 percentage point, the federal government should mail checks to each individual. The total value of the checks would equal 0.7 percent of GDP.

a. What effect would these payments have on the aggregate expenditure line in the 45°-line diagram? Briefly explain. 

b. Sahm argues, “The direct spending out of stimulus payments to individuals is followed by indirect . . . effects, in which production responds to the initial boost to spending.” What do economists call the process she is describing? Does the process result in a movement along the aggregate expenditure line or a shift in the line? Briefly explain.