Question

Search for an article that discusses an economic issue of your choice. Articles may be from a credible online source, magazines, newspapers, or journals.

Include an application of the course material in response to what you read. In your application answer the following questions:

Why is this issue of economic importance?

          How does this issue affect the Circular Flow of economics (national, state, local) where the issue occurs?

           How does this issue affect consumers, businesses, and the government?

           How does this issue affect demand and supply for the good/service involved?

Answer 1

choosing a topic for discussion in the current scenario is COVID-19 and its impact on employment. this is one of the worldwide concern topics, as this epidemic had hit almost all the job sector very badly. the article has been chosen by me is "Coronavirus: Four out of five people's jobs hit by pandemic" published on 7th April 2020 on BBC news.

this issue is associated with almost all sectors of the economy because every sector is closely related to these two factors of production labor and capital. so right from the financial sector to production, service, transportation distribution all the sectors are closely associated with labor employment. so this particular sector is one of the main lifelines for an economy.

b)when we describing the circular flow of economy we will start with the local level. at this level when there is a job cut or decline in job rate that will have a direct impact on state production level in every sector. so when there is low employment that will have an impact of low output level. if the demand is more and production is less then there will be demand-pull inflation. demand-pull inflation is a national level issue. as there is demand-pull inflation occurs in a country that will directly hit the price level and price of the product will increase. Now due to unemployment the factor market supply will be less and firms' production will be less and that will hit the good and services market and finally, it hit the household in terms of low employment and high price.

c) As there is unemployment in the market it hit the consumer in two way, 1. high price of the product will decline his consumption pattern for that product. 2. as a wage earner if he loses his job then it will hit his total budget line. Due to the decline in consumption the business sector also in trouble as they need to slow down production and cost reduction in terms of wage cut or labor force reduction. when both the major player in the economy face problem then the government will automatically be affected by it in terms of unemployment, inflation, budget allocation, debt increment, etc.

d) when the market is affected by unemployment then there is a straight cut in demand for goods and services. the reduction in demand will pull down the supply factor to do the adjustment. over the price will be high and quantity will low.