Question

Background: Discuss a current event that has an impact on the economy. The economic impact can felt be local, country-wide, or world-wide. When discussing the economic impact, you should mention things such as (but not be limited to) any combination of the following: GDP, inflation, unemployment, monetary policy, fiscal policy, international trade. Include in your paper the source(s) and dates for where you got the story.
Economic impact: Describe the impact that this event has on the economy, positive or negative. For example, what is the impact of the event on GDP, unemployment, inflation, etc.?

Social impact: describe the social impact that this event has, positive or negative. For example, how does this event impact people's standard of living or quality of life, equity between different groups, employment opportunities?

Summary: Provide some final thoughts on the current event, including your own thoughts on this. Is this a good thing, bad thing, mixed bag? How does your learning from this class impact that way you view this current event, if at all?

Answer 1

COVID -19 has induced a recession globally and this crisis is not based on financial speculation but on human behavior and choices. Unlike the other crisis, the virus led to a complete shutdown of international trade and industries inducing an economy into supply shock hence the prolonged duration put the economy into demand shock. The pandemic has affected economies globally by increasing unemployment and decreasing the GDP.

The US GDP growth in the first quarter of 2020 went into a negative of 5%. In June around "17 million were still unemployed and as per reports around 33 million had filed for unemployment benefits" till recently in the US. The majority of the unemployed are below 30 years of age and this is has been seen predominantly in retail and food industries.The impact is higher on adult women and also Hispanics where around 61% of Hispanic households have lost their income followed by 43% of blacks. The people employed have had reduced hours of work hence pay cuts, therefore, reducing purchasing power. The US oil market was flourishing but the pandemic induced a supply and demand shock hence leading to a collapse of the oil prices. The demand for oil reduced pushing down the price to $24 a barrel. Small business, have been affected as not only are they having a shortage but also a fall in demand, for instance, a coffin makes in Afghanistan has stated to a channel that although deaths are taking place his business is not doing well as people are burying the body with cotton as don't have the purchasing power to even buy a coffin.

The authorities should build up the economy by focusing on domestic production and reducing the reliance on imports and by providing firms with fiscal packages and tax cuts. This package would induce firms to produce, innovate, and create hence increase demand which will directly improve employment hence positively affecting aggregate demand and supply.