Question

• Which fiscal policy did U.S. government use during the COVID 19 pandemic? (i.e. expansionary or contractionary fiscal policy). What is the CARES Act passed by the U.S. Congress? What is the purpose of the CARES Act? Explain in terms of economics

Answer 1

The COVID-19 pandemic has enforced everyone to stay indoors as a result all economic activities have come to a standstill, due to this the economy of the world as a whole has plunged into a recession where the output shirks, to revive the economy out of recession an expansionary fiscal policy is pursued to revive the demand. The government has increased its spending and has also reduced its taxes. U.S. government used an expansionary fiscal policy.

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is a law intended to address the economic fallout of the COVID-19 pandemic in the United States The original bill proposal included $500 billion in direct payments to Americans, $208 billion in loans to major industry, and $300 billion in Small Business Administration loans. As a result of bipartisan negotiations, the bill grew to $2 trillion in the version unanimously passed by the Senate on March 25, 2020.

The CARES Act provides fast and direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries.