2 Question On 27 March 2020, the US Congress enacted the Coronavirus Aid, Relief, and Eco-...

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2 Question On 27 March 2020, the US Congress enacted the Coronavirus Aid, Relief, and Eco- nomic Security (CARES) Act, which provided for direct transfer payments to all US households, with payments being much larger compared to similar direct trans- fer payments enacted during previous economic downturns (specifically in the period 2001-08). Recent survey data on household behavior revealed how, on average, house- holds used those payments, summarized in the following chart: Recipients' Reported Use of CARES Act Stimulus Payments 31% Debt payments 6% Health care 27% Saving 16% Food, health and beauty aids, and household products 13% Other consumer spending 7% Durable goods 3 42% All spending ote Source: Researchers' calculations using data from the Nielsen Homescan Panel What do you think was the purpose of the CARES Act direct payments? Briefly explain. (4 points) b) Do you think the CARES Act has achieved its purpose? Briefly explain. (4 points) c) Some economists expressed surprise about the consumption pattern and also that consumers did not spend more on average. Why might that be a concern? What are possible, or likely, reasons consumers did not spend more? What conclusions do you draw for policy makers? Explain. (6 points) 2 Question On 27 March 2020, the US Congress enacted the Coronavirus Aid, Relief, and Eco- nomic Security (CARES) Act, which provided for direct transfer payments to all US households, with payments being much larger compared to similar direct trans- fer payments enacted during previous economic downturns (specifically in the period 2001-08). Recent survey data on household behavior revealed how, on average, house- holds used those payments, summarized in the following chart: Recipients' Reported Use of CARES Act Stimulus Payments 31% Debt payments 6% Health care 27% Saving 16% Food, health and beauty aids, and household products 13% Other consumer spending 7% Durable goods 3 42% All spending ote Source: Researchers' calculations using data from the Nielsen Homescan Panel What do you think was the purpose of the CARES Act direct payments? Briefly explain. (4 points) b) Do you think the CARES Act has achieved its purpose? Briefly explain. (4 points) c) Some economists expressed surprise about the consumption pattern and also that consumers did not spend more on average. Why might that be a concern? What are possible, or likely, reasons consumers did not spend more? What conclusions do you draw for policy makers? Explain. (6 points) 2 Question On 27 March 2020, the US Congress enacted the Coronavirus Aid, Relief, and Eco- nomic Security (CARES) Act, which provided for direct transfer payments to all US households, with payments being much larger compared to similar direct trans- fer payments enacted during previous economic downturns (specifically in the period 2001-08). Recent survey data on household behavior revealed how, on average, house- holds used those payments, summarized in the following chart: Recipients' Reported Use of CARES Act Stimulus Payments 31% Debt payments 6% Health care 27% Saving 16% Food, health and beauty aids, and household products 13% Other consumer spending 7% Durable goods 3 42% All spending ote Source: Researchers' calculations using data from the Nielsen Homescan Panel What do you think was the purpose of the CARES Act direct payments? Briefly explain. (4 points) b) Do you think the CARES Act has achieved its purpose? Briefly explain. (4 points) c) Some economists expressed surprise about the consumption pattern and also that consumers did not spend more on average. Why might that be a concern? What are possible, or likely, reasons consumers did not spend more? What conclusions do you draw for policy makers? Explain. (6 points) 2 Question On 27 March 2020, the US Congress enacted the Coronavirus Aid, Relief, and Eco- nomic Security (CARES) Act, which provided for direct transfer payments to all US households, with payments being much larger compared to similar direct trans- fer payments enacted during previous economic downturns (specifically in the period 2001-08). Recent survey data on household behavior revealed how, on average, house- holds used those payments, summarized in the following chart: Recipients' Reported Use of CARES Act Stimulus Payments 31% Debt payments 6% Health care 27% Saving 16% Food, health and beauty aids, and household products 13% Other consumer spending 7% Durable goods 3 42% All spending ote Source: Researchers' calculations using data from the Nielsen Homescan Panel What do you think was the purpose of the CARES Act direct payments? Briefly explain. (4 points) b) Do you think the CARES Act has achieved its purpose? Briefly explain. (4 points) c) Some economists expressed surprise about the consumption pattern and also that consumers did not spend more on average. Why might that be a concern? What are possible, or likely, reasons consumers did not spend more? What conclusions do you draw for policy makers? Explain. (6 points)

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a What do you think was the purpose of the CARES Act direct payments Briefly explain The main purpose of the CARES Act direct payments was to stimulat... View the full answer