Answer to Question #208925 in Macroeconomics for Anisha Kumar

Question

Discuss the key macroeconomic effects of COVID19 (ignore health effects) on any economy of New Zealand. Identify how this economy can promote economic growth given the pandemic. Identify three macroeconomic policy interventions to support the livelihood of people in such an economy.

Answer 1

Effects of COVID19 on Any Economy of New Zealand.

Due to the COVID-19 epidemic, the New Zealand economy officially entered a depression in the June quarter, with the nation’s gross domestic product dropping by around twelve percent. In addition, the foreign travel ban and a nationwide lockdown harmed the retail, lodging, hospitality, and transport areas.

The government implemented a four-tier alert system, putting much of the state’s economy on lockdown. However, as the government's eradication campaign became more successful, lockdown prohibitions on various economic activities were gradually relaxed.

Since the government's border controls and controlled isolation requirements prevented tourists and seasonal employees from accessing the nation, the horticulture and viticulture firms have reported a labor shortage.

Macroeconomic Policy Interventions

Development Matters

The most crucial element determining poverty is economic growth. Several quantitative research has discovered a substantial link between national per capita income and national poverty indicators, utilizing both income and no-income gauges of poverty. 

Financial and Exchange Rate Strategies

Inflation, production, and the real exchange rate are the three main avenues through which monetary and exchange rate policies affect the poor. Inflation harms the poor by acting as a regressive tax and stifling growth. On the other hand, fluctuations in output have a clear impact on poor people's wages and monetary and exchange rate measures.

Fiscal Policy

Fiscal policy can directly influence the poor both in terms of the government's overall fiscal position and the distributional implications of tax policy and government expenditure. In terms of more effective and better-focused public funds, structural fiscal reforms in budget and financial accounting, public administration, management, transparency, and accountability can also help the poor.