Question

Find an article on current Monetary or Fiscal Policy and summarize it (attach for your colleagues to read). Analyze the policy as either contractionary or expansionary- Fiscal or Monetary policy- and comment on appropriateness/ effectiveness to demonstrate understanding of your new knowledge!

Answer 1

A report article was published in the famous economic times' newspaper titled - Mix of both fiscal and monetary policy is needed to salvage the economy: Report", published on March 18, 2020

According to this report, to overcome the ill-effects of COVID-19 crisis and lockdown that followed, a slew of measures that combine both expansionary fiscal and expansionary monetary policy is to be used, to ensure that the economy returns to its initial economic growth trajectory.

The central bank should bring in a rate cut to accommodate the surge in liquidity demand and shock-related price increases.

The government should spend on providing the relief to the people at the lower strata who lost income because of the shutdown of commercial activities following the lockdown.

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The policy stance taken by the government and the central bank are apt response to salvage the economy from the collateral damage from the fall out of the spread of COVID-19

This will help keep the economy buoyant and help it to ease out the risk imposed by the slackness in the manufacturing & service industry as well as dampness in the consumption & economic activity.