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In: Economics

There are many situations that may contribute to the inflation of an economy where the volatility...

There are many situations that may contribute to the inflation of an economy where the volatility and uncertainty can lead to lower levels of investments. With regards to the current situation that is taking place around the world (COVID-19), many stores and businesses in the Kingdom of Bahrain and around the world were faced to close their doors to customers for at least two weeks. Explain in your own words, how these businesses and financial institutions will make up for the losses they are or may face. Will these businesses and financial institutions cause inflation within the economy? Explain.

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Expert Solution

Covid 19 has had a major impact on the global market through out the first quarter of 2020.As a result of cancelling of public gatherings and self quarantine for protection ,there was a slump in demand.Many stores and businesses were forced to close their doors to the customers.lt is not only businesses that face economic distress .A sad fact that the Economy in recent decades has been that far too many people have been relegated to economic position that are even less secure than a small business.

Many stores and businesses have already Cut down their wages and the number of people employed.The job market has been the worst hit as more than million jobs vanished.

For all the businesses and financial institutions,a recovery won't be smooth and will take time.Stronger pandemic response will yeild a better recovery.

*Those companies with an integrated supply chain,a well balanced geographic mix of stores and a diversified business model has more chances of bouncing back in the second quarter of the year.

*The stores and businesses should give special attention to

>Employee management and wellbeing

>supply chain monitoring

>New marketing and sale techniques.

>Keep the customers engaged and reassured in the short term.

Since it will take time to get the product back on track, supply will be low and prices will rise definitely.lf the government adopts expansionary fiscal policy and central bank adopts expansionary monetary policy,it will further worsen inflationary pressures in the economy.


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