Question

Debit Cards as a Fiscal Stimulus. Here is one unusual fiscal​policy: The government would issue​ time-dated debit cards to each person that had to be spent on goods and services produced only by U.S. firms within a fixed period​ (say, three​ months) or become worthless. Suppose the government was considering whether to issue​$400 in​ time-dated debit cards to each household or give each household​ $400 in cash instead. As far as the administration of the two programs is​ concerned, A. the debit card program is easier to operate since no cash transactions need to be made. B. the debit card program is easier to administer since it can be set up as a​food-stamps type program. C. they are equally easy to administer. D. the cash payments program is easier to administer through a tax rebate program.

Answer 1

D) the cash payments program is easier to administer through a tax rebate program.

Step-by-step explanation:

Of course it is much easier to set up a cash payment program, but its effectiveness would also be much lower. Many people might just save the money or but imported goods.

Implementing the debit card system requires millions of debit cards made and distributed, and that is not necessarily an easy of cheap task.

But the greatest advantage of the debit card system is that the citizens must spend the money within a small time frame and they also must spend it on American products. One single cost, twice the benefits. It would help increase total consumption in the economy and specially benefit domestic companies.