Question

How to repair the economy of the country after COVID-19. Explain export, import, and unemployment

Answer 1

As we know due to Covid 19 the over all aggregate demand for most the developing and developed countries start fallen. When aggregate demand reduces the AD curve shift left ward due to which most of the country face recession after the Covid 19. To curb or overcome this recession the government should use Monetary and fiscal polcies.

Now we discuss how Monetary policy curb the recession. As we know monetary policy is a policy in which either government changes interest rate or money supply sometimes do both. When government reduces the interest rate and increase the money supply it helps to increase aggregate demand and reduces recessionary pressure. Increase in aggregate demand means need to generate more output. To generate more output, we need more workers hence it helps to increase employment and income as well. Increase in output also helps to increase in export and increase in income also helps to increase import.

Now we discuss how fiscal policy curb the recession. As we know fiscal policy is a policy in which either government changes tax rate or government spending sometimes do both. When government reduces tax rate and increase in government spending it helps to increase aggregate demand and reduces recessionary gap. Reduce in tax means more disposable income in the hands of the people and increase in government spending helps to increase employment. Finally increase in aggreate demand helps to increase output, employment, income and reduces recessionary pressure. Increase in output helps to increase export and increase in income also helps to increase import.

Export is international trade of goods and services produced in one country and sold to another country. The seller of such goods and services is an exporter.

Import means buying foregin goods and services by people, businesses and government of a country. The buyer of such goods and services is an importer.

Unemployment refers to situation when workers who want to work are unable to find jobs or work.