Question

COVID-19 pandemic brings great effect to the worldwide economy. Mention and explain 4 microeconomics and 4 macroeconomics consequences of the economic phenomenon that happens amid COVID-19 pandemic!

Answer 1

The covid 19 pandemic has severely destabilised the economy at both the microeconomic as well as macroeconomic level.

At the microeconomic scale covid 19 has affected in the following ways:

1) The households have cut consumption on luxury and high value items due to lower purchasing power due to lack of jobs and wage cuts.

2) Many children have taken out of schools due to inability to pay fees and lack of technology to attend online classes.

3) Due to lower income and falling interest rates, people are spending a larger proportion of their incomes and saving less.

4) Small business persons have been forced to shut down their enterprises due to closing of shops and falling demand.

The macroeconomic repercussions of the pandemic are as follows:

1) The economic growth of countries in terms of their national incomes have fallen considerably, going into negative growth many a times.

2) There massive disinflation in case of may commodities, while certain commodities have become costly due to lowered production.

3) Tourism industry has been completely ruined due to travel restrictions during the pandemic. Regions dependent on tourism are suffering badly.

4) The stock market has collapsed due to bearish speculations and it unlikely to pick up in the near future, leading to widespread losses.