Answer Happy

In the time of high pandemic transmission, consumption and
investment are down because people are restricted or discouraged
from engaging in normal activities. They fear the virus. The push
of economic managers to reopen the economy in a situation of high
COVID-19 transmission will not be enough for people to conquer
their fear. Depressed consumption and investment result in an
output gap. The output gap means potential output or full
employment has not been met. But because neither private
consumption nor private investment can close the gap, government
spending has to do the heavy lifting. But government spending not
only covers the huge output gap (as evidenced by the deep
recession) but also the big expenditures to flatten the pandemic
curve. Government must spend not only to protect the unemployed but
also to save the sick, the dying, and the hungry. Bold government
spending is absolutely necessary, even if this would mean violating
the conventional debt and deficit indicators. Since we are dealing
with an extraordinary pandemic and economic crisis, the worry of
the economic managers regarding higher debt and deficit is
misplaced.