Question

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.G (government) 2.Exports 3. Government budget (T-G) 4.The value of our dollar in comparison to the US dollar. 5.The supply of money (M1) 6. The prime interest rate

Answer 1

1) due to covid 19 every aspect of the economy is getting affected, including government. There are states and countries which are able to tackle the problem but there are also countries which are getting affected very badly. In those areas government or the ruling party is going to pay a big price for the loss latter.

2) export has declined drastically because of the world wide lockdown. Almost no industries are running except for few. So the export of the country's have gone down a lot.

3) government budget is declining due to the pandemic because of the relief packages being made for the poor and medical facilities. At a time like this government revenue is really low while government expenditure is increasing drastically so government budget will be low.

4) the value of dollars in comparison to us dollar will rise or fall depending on how severely that economy is affected by the pandemic. If america is more affected than your country and the government spends a lot to balance there economy then there will be inflation in America and this will make your dollar stronger and vice versa.

5)the supply of money will decline because there is way lot of warks pending. Companies are going bankrupt. People are out of there job so income is low in the nation and demand is also low. So there will be less investment and also less income again so this will decline the supply of money in the economy.

6)the prime interest rate is low by most of the central government to encourage investment.