Answer to Question #209190 in Macroeconomics for Gray

Question

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

Answer 1

The supply and demand sides, which are the;

GDP - The Gross Domestic Product has declined in the economy. Less goods and services are being produced.

Tourism - The number of tourists visiting the country has reduced due to the fear of getting infected with Covid 19.

Capital stock - Many employees have decided to work from home leading to low capital stock.

Human capital - Workers have lost jobs due to their company maybe declining and being closed.

Economic freedom - Due to lack of jobs, no income or less income that leads to lack of economic freedom.

Unemployment - Many employees lost their jobs due to Covid 19.

The results show a toll on the GDP, tourism, unemployment, capital stock, and especially human capital for 2020. The recommended policy interventions are public finance spending initiatives focused on securing employment and keeping highly qualified staff in Montenegrin companies. Considering all uncertainties, the rebound of the Montenegrin economy could take a few years to reach pre-COVID 19 output levels.