Question

As part of the economy, each of us will be affected by the state of the economy and the actions policy makers take to stabilize or advance it. Conclude by sharing why understanding these actions and outcomes matter to you as an individual who is part of the economic system. How do they affect the society/economy? What could be done differently? Share personal examples and experiences.

Answer 1

Government's action or action taken up by central bank (Fed in the USA) is going to affect us as an individual in the economy. The action and policy planning, by these authorities are going to create employment, going to control price level and modifies the interest rate to affect our cost of borrowing or change the tax rate to change the amount of disposable income. These changes affect us, though in different ways as each individual pursues different activities, either go for a job or go for a self business, or have different basket of goods to consume, having different prices to pay. But, it affects us. It can be understood by examples. The US government has announced $1200 payment to those, who had their income of $75000 or less in COVID-19 crisis. I am eligible for it and I got the payment. So, government policy created benefit to me in the light of lockdown due to COVID-19. Rates are at rock bottom, that helped me get loans at lower interest rates. It decreased cost of borrowings and It also benefited me just before the lockdown. My friend had small business and he got benefited from the stimulus package of $3 trillion given by the US government to all the business enterprises in fight against COVID-19. So, policies and action are affecting us in different ways.

It affects societies in the form that welfare level is increased, people get superior quality of life and mortality rate decreases.  it affects economy that economy achieves potential output level, reduces unemployment and smartly uses resources to become more efficiency.

Government could do few things differently, as they could focus upon a policy that government eradicate poverty with a good plan where people get employability skills and able to get good jobs. Government could ensure to be proactive in scenarios like COVID-19 pandemic, rather being in a damage control mode. It could control the losses and economy will be in a better health than it is now.