Question

what the governments (Local, State and Federal) are doing to address the economic conditions created by the pandemic covid 19.   First identify a current government policy you are aware of and identify its components. This is the “macro” overview. Then, describe how this policy, remember, it can be a local (city/county), state or federal, is intended to impact a specific industry, firms and/or individuals. This is the “micro” overview.

Answer 1

The Corona Virus Pandemic has caused deep concerns among economists on its impact on all levels. They believe that it will cause a recession which has never been seen before.

The core reason for this is that business establishments remain shut and do not have the ability to open up operations until the government asks them to. Only those goods are being sold which are essential for human consumption such as groceries etc.

This has resulted in a decline of the Aggregate Demand which is the total demand for goods and services in the economy resulting in crisis at all major levels.

Macro-Economic Measures: -

Most countries are taking serious steps to reduce tax rates and allow for higher demand. One of the prime examples of this is the country of United States which has recently offered support in terms of value which is about 2 trillion dollars of stimulus for the economy.

At the macroeconomic level, such stimulus packages result in increasing the aggregate demand for goods and services. This is because people have more money available in their hands. Industries get supported as loans become cheaper and interest rates are reduced.

The country is also aiming to reduce payments from manufacturing industries towards loans. These industries are worst hit as establishments remain shut. The idea is to allow for delayed payments without risk default and allowing them to function normally post the economic crisis.

Micro Economic Results: -

The idea behind reducing taxes or interest rates and to increase government spending in health care is so that consumers can demand more goods and services in the country. This would allow them to be at a better position and have more availability of capital as well as not affect their liquidity position.

As a consumer, I risk not being able to demand for goods and services int he economy. As a producer there is risk as supply lines are shut. As a worker, unemployment looms as industries remain shut.

All these topics are well covered and get the required support from the government which is aiming to reduce interest rates as well as taxes. This will allow them to function normally in the long run.

Please feel free to ask your doubts in the comments section.