Answer to Question #234503 in Macroeconomics for Ona

Question

How does covid 19 affect the economy?

Answer 1

The impact of Covid-19 on the economy can be summarized based on inflation, unemployment, and Gross Domestic Product. Foremost, the Covid-19 has resulted in an increase in the inflation rate. Covid-19 makes it difficult for the firms to continue with their normal operations. The firms have been forced to stop or reduce production to minimize the spread of covid-19 among the employees. As a result, there has been a shortage of goods causing a rise in inflation. Furthermore, with the closure of businesses, many individuals have become unemployed. The travel and movement barriers enacted by various governments across the globe have also resulted in an increase in unemployment, especially in the transport and tourism sectors. With an increase in unemployment, there has been a significant reduction in consumption, especially durable goods. Also, investment and exports have also reduced. The reduction in consumption, investment, and exports has led to a fall in economic growth or recessions in some economies. In conclusion, the covid-19 causes an increase in unemployment and inflation and a reduction in economic growth.