Recent economic research shows that recipients of the first round of COVID stimulus payments only spent about 25% of the money. Of course, the decisions made by individual households varied widely, but this spending pattern is similar to earlier cases of federal stimulus spending.
The funds that were not spent were used for debt reduction and savings. While these are responsible financial decisions, these actions do not have as much direct impact on current economic activity. Given that the money is intended to stimulate economic activity, the federal stimulus funds would have more immediate impact on the economy if it was spent quickly by the recipients.
The current presidential administration has proposed another round of stimulus later this year. Suppose the next round of stimulus payments are issued on debit cards that can only be used to make purchases (i.e., no ATM withdrawals of cash or ACH transfers to your bank account). Also, the remaining balance on the card goes to zero 6 weeks after the card was issued. Would this system increase the share of the stimulus payments that are spent quickly rather than saved? Do you see any problems with this payment system? Are there ways to beat the system and effectively save this money rather than spend it?
Draft a discussion summary with 500 words, and follow the APA format, refer to the below textbook to complete the assignment and answer all the questions.
Text Book: Title: Comparative Economics in a Transforming World Economy
ISBN: 9780262037334
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Edition: Third
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