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. 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

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) (3 marks)

Ans : Due to covid19 many countries affected very Badly a few countries are Italy, Iran, south Korea, Japan and USA, china also. Death rate are very high in all these countries this virus is pandemic as Infectiosness in nature. Contain respiratory syndrome individual who will get infected can't breath well. As many of the developing or developed countries government suggested their people to maintain social distancing, quarantine, isolation of infected population the demand for products that is necessary products will fall automatically and this will leads to decrease in consumption of the people.

1. I (investment) (3 marks)

Answer : if the covid 19 last long than this will leads to drastic fall in investment because as of now we can see and conclude that in this scenario investment will give any benefits to individual here demand is drastically falling so investment also fall.

1. G (government) (3 marks) answer: government spend much of money in this pendamic so for example Italy government almost collapse so here this will not at all beneficial for any economy to survive in this pendamic. This is very necessary for all government to spend on more and more in necessary things like medicine, ventilators, and the othes essential things for patients that is infected individuals and make proper arrangements for their isolation.

1. Imports (3 marks)

Ans: imports of many things is hampered till now and if it sustained for long than this will also damage more for all economy in the world. As demand for commodity is low as people are

earning right now they have less or low money to purchase so this will reduce import also.

1. Exports (3 marks) Ans: export of many goods also hampered till now because most of the countries in the world infected by this virut so stock market almost down and as farmers are not able to produce much output due to qurantine so they are unable to export much.

1. Taxes (2 marks)

Answer: taxes in most of the countries have been shorten by the government because people are unable to go to work they have to pay their loan and also meet many expances of their families so here in many countries government are showing mercy for their citizens regarding tax or interest or loans.

1. Government budget (T-G) (2 marks)

Answer: there is very less chance to earn money in quarantine so people are now working home and the unorganized sector people are totally unemployment so government will Collect less revenue and have less revenue to make budget.

1. GDP (4 marks)

Answer: covid19 will create adverse effects on GDP of the economy automatically as there are less production in the economy people produce less sell less and have less money in hand so GDP will automatically fall down as people have less or no money to invest in economy.

1. The value of our dollar in comparison to the US dollar. (3 marks)

Answer: there will be depreciation of the currency value of money decreases.

1. The unemployment rate (3 marks)

Unemployment rate increases because quarantine should be maintained, social distancing should be maintain people who have job have less faith that their job will be sustain or not and on the other hand there are many people whose earning is on daily basis are totally unemployed right now.

1. The supply of money (M1) (2 marks)

Answer :as purchasing power is less there will be less demand for money snd supply of money will also reduced.

1. The prime interest rate (2 marks) answer: lending rate have been reduced by the government so that individuals can survive in this Pendamic situation.