Answer to Question #221218 in Macroeconomics for Dean

Question

How is government intervention in the economy justified in its implementation of measures to fight against covid-19 pandemic

Answer 1

Solution:

The covid-19 pandemic has greatly negatively impacted the whole economy. It has led to a sharp downturn in the economy through a drop in GDP, recession, high levels of unemployment, and disruption in the global supply chain. It has also led to poor performance in financial markets leading to an increase in goods and services prices.

Therefore, the government has intervened to help save the economy and to limit the effects of the covid-19 pandemic on the overall economy. The government has undertaken fiscal and monetary policies in order to ensure that the economy is running smoothly despite the negative effects of covid-19. This also includes stimulus packages that have been issued to citizens and businesses to save them from the covid-19 hardships. All these interventions by the government have saved the whole economy, including making it easy for the economy to recover quickly from the covid-19 pandemic.

Therefore, government actions are justified because without those interventions most economies would have collapsed by now.