Economic Measures to Minimize COVID-19 Impact

APPLIED ECONOMICS

Table of Contents
Table of Contents.............................................................................................................................2
MAIN BODY...................................................................................................................................4
1. Economic measures used by government to minimize the issue............................................4
2. Presenting the reason of taking action by government to minimize COVID -19...................4
3. RBA steps with regard to monetary policy and its effect on economy...................................5
4. Fiscal stimulus package measure............................................................................................5
5. Reason behind fiscal policy to becoming more effective than monetary policy....................6
6. Consequences of large fiscal stimulus package......................................................................6
REFERENCES................................................................................................................................8

MAIN BODY
1. Economic measures used by government to minimize the issue
COVID- 19 affect the overall world’s economy in negative manner and that is why,
government of every country make decision in order to minimize the problem. For that
government should use Fiscal and monetary policy to solve the problem of recession. Such that
with the help of employ expansionary fiscal policy, government has to lower down the tax rate in
order to increase the aggregate demand as well as increase economic growth too (Li, 2020). This
Fiscal policy not only assists to improve recession time but also solve the problem of
unemployment. It is also analyzed that aggregate demand and supply do not always move
together and that is why if supply increases income automatically increases. That is why; this
Fiscal policy is introduced which in turn assist to improve the problem.
On the other side, monetary policy reflect that central bank use their own power over a
banking system. As to fight against COVID-19, central bank uses expansionary monetary policy
in order to increase the money supply along with quantity of loan by increase interest rates
(Pomson, 2019). Therefore, it is stated that by using this measure interest rates are lower which
reduce consumer’s cost of borrowing to buy heavy product like car, house. Overall it will assist
to reduce the cost of investment and assist to solve the problem of recession.
2. Presenting the reason of taking action by government to minimize COVID -19.
There is a need to introduce fiscal packages stimulus for the people because COVID-19
leads entire economy towards down. As it is hard to survive without job in this era and that is
why, with the help of introducing this packages, unemployment is reduces up to some level,
along with creates economic activity again. In addition to this, it is also analyzed that by taking
active stabilization approach to monetary and fiscal policy will help to smooth out the fluctuation
cycle and further reduce the severity of recession as well (Heine, Faure and Dominioni, 2020).
Beside this, Multiplier is also work with fiscal stimulus and that is why increase in government
investment spending will be successful in stimulating the economy. It is so because it leads to
cause multiple effects upon economy. Thus, introducing fiscal policy will help to regain
economic activity and balance it with earlier economy to cope up with adverse situation due to
pandemic. In addition to this another major reason for the government to take action for OCVID
19 situation is that many countries are interrelated and the effect of one economy affects the