Final answer:
The total expansion of the economy from the $2800 (2 checks of $1400 each) with a marginal propensity to consume of 0.50 is $5600. If the government spent $5 trillion more than tax revenues for 3 years, they had a $5 trillion deficit each year, resulting in a total debt increase of $15 trillion.
Step-by-step explanation:
If the economy is in a recession and the government gives you 2 checks for $1400 each, and you decide to put away $700 each time, your marginal propensity to consume (MPC) is 0.50. This is because you are spending half ($700) of each check and saving the other half ($700). The formula to calculate the total expansion of the economy from your checks using the simple spending multiplier is 1/(1-MPC). Therefore, the multiplier is 1/(1-0.50) = 2. To find the total expansion of the economy, we multiply the total amount of the checks by the multiplier: (2 checks × $1400/check) × 2 = $5600. The total expansion of the economy from your checks is $5600.
Concerning the government's financial situation, if the government has spent $5 trillion more than they received in tax revenue for the past 3 years, the correct statement would be: The government had a $5 trillion deficit for 3 years and now has a total debt of $15 trillion (assuming no previous debt).