Question

FOR ECON

The COVID virus has had an impact on all facets of our economy. Please discuss the impact it has had on each of the variables below over the net 12 months. Explain if the will increase, decrease, or remain unchanged and the reasoning behind your decision. You do not have to cite the textbook, but all other sources should be cited according to APA format.

1. C (consumption) 2. I (investment) 3. G (government) 4. Imports 5.. Exports 6. Taxes 7. Government budget (T-G) 8. GDP 9. The value of our dollar in comparison to the US dollar. 10 The unemployment rate 11. The supply of money (M1) 12. The prime interest rate

Answer 1

1.consumption will decrease , bcz many people have lost their job ,so income flow in their hand decrease.production activities are stopped , thus no employment generation and no income in hands of people.

2.investment also decrease due to market instability and lower return chance as world Economy enter into recession.

3.goverment expenditure increases to control inflation and revival of economy from recession.

4.imports will increases as India is net importer as well as new machines and technology will require for production.

5.exports decrease as proudction is at its lowest level and investment also decrease.

6.taxes collection also decrease as indirect collection decrease due to lower consumption as well as low level of production and trade related levy, taxe decrease.

7.goverment budget is imbalance toward consumption side because taxes collection will be lower than consumption by goverment,i.e.revenue deficit and budget deficit increases.

8 gdp also decrease as production of final goods and services also decreasing.

9.as our importer getting expensive due to recession,bcz production is decrease world wide but cost of production increases and exports is at lower level , which increases value of dollar in term of rupee.

10.unemployment rate increases as gdp decrease or ob cut, and production activities hamper .

11.supply of money decrease as currency at people hand is less and demand deposit also decrease as banking actually are lowest level and other deposit in rbi fund also less.

12.prime interest rate will be lower to increase money supply bin the economy .