This is not a writing assignment, this is a multiple-choice question
As a result of the coronavirus crisis of 2020 and the consequent lockdowns that followed across the U.S. economic activity in many of the states with the highest levels of economic activity prior to the crisis, have come (came) to a standstill. As stock and other financial markets also declined, millions of jobs were lost weekly, and both personal and investment incomes plummetted, it is expected that the tax revenues collected by the Federal government will also be much below the previously expected levels in 2020. In order to boost the economy and avert an economic depression (a serious economic recession) the Federal government pumped over $2 trillion dollars of economic stimulus so that people whose incomes had dropped sharply or disappeared entirely, would still be able to continue making basic purchases, and this will give businesses a reason to produce and hire workers.
This increased Federal spending in the year 2020 is likely to have the following impact upon the U.S. fiscal (budget) situation:
(Please select the BEST and most complete answer from the below choices.)
Group of answer choices
Both the Federal Budget Deficit as well as the Federal Debt are expected to increase sharply in 2020.
The fiscal stimulus will have no impact upon the Federal Budget -i.e. it is expected to be fiscally neutral, as the tax revenue collected in 2020 will also increase because of the fiscal stimulus.
The U.S. Federal Budget Deficit may increase for 2020, but the Federal Debt will decrease as the U.S. will now be able to write off amounts owed to China for the treasury securities China purchased in previous years.
The $2.2 trillion fiscal stimuli that have been injected into the U.S. economy is expected to grow the economy so rapidly that by the third quarter for 2020 there will be a huge increase in tax revenues collected and this will be about double the size of the stimulus expended in the first 2 quarters of the year 2020.
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