Many individuals who receive a stimulus check as a result of COVID- 19 will receive a $1200 direct deposit. Individuals earning between 75k and 99k will only receive a fraction of the $1200 deposit. Suppose Debra earned below 75k in 2018 and 2019 and receives a $1200 direct deposit stimulus. Use the IS-LM curves as well as the AD-AS curves to show the impacts on the macroeconomy. Be sure to label all axes and curves. In one or more paragraphs explain what should happen when we assume COVID-19 causes an initial shock to the macroeconomy first and then show how Debra’s deposit moves the economy from that state of shock in some way when the required reserve ratio is 0.2. Also, discuss the impact on all variables and economic agents. Be sure to indicate the direction of movement for all variables.




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