Question

I need an answer to all three questions, please.

Q1: Which of the following was not a policy response to the Economic crisis associated with the COVID-19 Crisis?

Select one:

a. The Fed lowered the policy rate by roughly 1.5 percentage points to nearly zero.

b. The U.S. Congress passed a roughly $3 Trillion economic stimulus package.

c. The Commonwealth of Massachusetts relaxed the balanced budget rule in the State Constitution.

d. The Fed introduced facilities to keep markets liquid by buying assets other than US Treasury Bills.

e. The U.S. Congress increased the amount and the availability of unemployment insurance benefits.

Q2: Consider a typical Mexican corn farmer. In 1993, she farms a small 4-acre plot and sells corn mostly to people in her home state of Oaxaca and across Mexico. After the signing of NAFTA in 1994, which statement most accurately reflects her situation:

Select one:

a. Business boomed, as she began to sell corn not only to customers in Mexico but to customers from the United States and Canada. She expanded her acreage.

b. Although she sold corn to more people after 1994, the business stayed largely the same as United States farmers also sold their corn to Mexico.

c. Cheaper corn flooded into Oaxaca from the United States’ Midwest, and Oaxacans and other Mexicans now purchased lots of corn from the US. No longer able to compete, she had to stop farming corn.

d. It became more profitable to rent her land out to people on AirBnB who wanted to engage in maize-based agritourism.

Q3: During a recessionary crisis, one tool in the Keynesian toolbox is fiscal policy. Some economists advocate for targeting stimulus (either increasing government spending [G] and/or decreasing taxes [T]) towards individuals with incomes on the lower half of the income distribution. They argue that:

Select one:

a. Poorer people have a higher marginal propensity to consume (MPC), and thus increase the overall multiplier and the effectiveness of fiscal policy.  

b. Poorer people will engage in stock buybacks, and increase the value of domestic companies.

c. People will work harder if they are the recipients of government stimulus.

d. No economists actually argue for targeting stimulus towards individuals on the lower half of the income distribution

Answer 1