In: Economics
Question: Describe various policy measures taken by governments and Central Banks to deal with Corona Pandemic. How effective have been these policy measures, especially monetary and fiscal policies, in reducing the severity of the crisis? Take one or more countries as examples for your study. Provide data and analysis to support your answer.
Please answer the question in detail. Support your answer with data and references as much as possible. Write in your own words and provide references wherever applicable. Use economic terminologies as much as possible. Write legibly in complete sentences using the correct English language. There is no page limit.
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Corona Pandemic is happening worldwide at different degrees. It is leaving more impact on the economies than health. In order to reduce or overcome the challenge, governments and Central Banks of all the Corona suffered countries are taking various policy measures. The governments are implementing expansionary fiscal policies. The governments are increasing spending mainly. They are spending huge money on provision of good healthcare facilities to corona suffered people. Besides, they are also providing monetary help to people whose income stopped due to lockdown. For example, Indian government is giving some bulks of money to low earning groups, people associated with government development programs, rural people, women etc. through their bank accounts.
In order to reduce negative impact on the economy, Central Banks throughout the countries also trying their best. They also are implementing expansionary monetary policies. They are adopting various policies so that credit availability within the economy doesn’t reduce or if reduced then to a shallow level. For example, in Canada, the Bank of Canada is continuously lowering its targeted overnight rate. Recently, the targeted overnight rate decreased to 0.25% in Canada. The intention of taking this policy is that banks are inspired to continue their loan activities, consumption and investment volume are maintained as pre- pandemic period.
In this mission, monetary and fiscal policies are working to some extent. Due to expansionary fiscal policies taken by the governments, consumption level is increasing to some extent. Again, as a consequence of expansionary monetary policies taken by the Central Banks, banking system is working to some extent and this is helping the economies not to degrade much. One thing is clear that banking system is getting harder hit by the Corona pandemic than other sector and the banking system is the backbone of an economy to grow. So, attempt of the Central Banks to defend this sector through expansionary monetary policies is considerable success. From this perspective, it can be summarized that monetary policies are working effectively in reducing the severity of the crisis.