I have a limited understanding of economy, however, I've been trying to catch up from various resources. Recently, the news are all about the enormous stimuli bills debated/implemented by governments all around the world to counterbalance the negative effects of the coronavirus. My question has two parts:
- First, where do those numbers come from? In the US they are talking about $2 trillion rescue plans, a number which I have no sense whatsoever for. In simple terms, which are the most important factors lawmakers consider when coming to this number (or, at least to the order of magnitude)?
- Is it possible these stimuli will lead to hyperinflation? On the short run, the stimuli won't increase the productivity since businesses will still be closed. "Dumping" money on them will indeed help them from default, but with no underlying productivity I can't see how this extra liquidity won't boost inflation. In other words, the supplies are limited due to the reduced productivity, but now the demand will increase because everyone will have free cash in their hands.