Question

Given the current state of things with the coronavirus, we are seeing real damage being done to the economy. Policymakers are struggling to help the economy. Suppose you were in charge of either monetary policy (i.e., changes in the money supply) or fiscal policy (i.e., changes in government spending and taxing), explain what you would do and why you believe it would help.

Answer 1

COVID 19- covid 19 or coronavirus element is a disease, and its virus is mainly transmitted through droplets generated germs when an infected person coughs, sneezes, or exhales.all the medical scientist have been engaged in creation of vaccine for this disease.it has created global financial crisis and stress on the economy

COVID -19 AND THE GLOBAL ECONOMY- covid 19 has affected the entire world economy. transportation have been stopped due to this the airlines, buses personal vehicles are not operating due to this the demand for crude oil has declined as low from there two decade prices. there is too much volatility in the market and no market dealing is taking place. people have been locked down in there homes due to precautionary measures.

it has affected adversely

1. GLOBAL AIRLINES SECTOR
2. OIL PRODUCTION SECTOR
3. REAL ESTATE SECTOR
4. TRANSPORTATION SECTOR
5. TOURISM SECTOR

STEPS TAKEN IN MONETARY POLICIES-

• A)REDUCTION IN REPO RATE
• B)REDUCTION IN INTEREST RATE ON DEPOSITS
• C)ALLOWING BANK TO DELAY AND POSTPONE THE EMI ON LOAN GRANTED
• D) TEMPORARY DECLINE ON THE RETURNS PROVIDED ON SOCIAL SECURITY SCHEMES
• E) LIMIT THE NON DEVELOPMENT EXPENDITURE AND CANCELLATION OF SANCTIONING THE NON ESSENTIAL LOANS.

Though the above decisions may seem to be impractical to some extent and can create a burden on the various Banking and NBFC but the relief can be given through fiscal policy.

steps taken through fiscal policy.

1. relaxations in taxation
2. increase spending in PDS (public distribution schemes)
3. increase in transfer payment
4. creation of an contingent fund for the critical timing
5. increase public spending after the post covid impact

these are the decision to be made and steps to be undertaken

taxation relief would ease the stress of banking sector and various NBFC sector and will recover the future loss due to the postpone payment of loans.

government would lead to play an eminent role and all the burden will be over the government.