TOPIC: COVID-19 A MAJOR ISSUE IN U.

S ECONOMY

Group members: Asena Ratabua (S11159904)

Salome Waqa (S11158832)

Tutorial day: Monday 3-4pm

I’m just deeply amazed on how the U.S, the world’s largest economy has suffered severely due
to this COVID-19. This made me imagine that if this COVID-19 is ending individual’s lives and
making people not go to work then this would without a doubt be probably be the deepest
recessions in history of U.S. I read an article online [ CITATION Mil20 \l 1033 ] stated that
businesses are in losses while some are battling to keep staff on the pay roll as income falls.
Aside from this, was the quantity of people that got unemployed.

I then thought to myself once more; for what reason do individuals lose their jobs because of this
horrible situation? What’s more, when there is a rise in unemployment what impact would it
have on the U.S economy overall?

So with regards to the first question, as per [ CITATION Sha20 \l 1033 ] many businesses have been
forced to shut down during the lockdowns where more individuals have been laid off. Maybe, on
the off chance that this is occurring, at that point workers will increase their labour effort when
unemployment rises in view of the danger of lay-offs that gets to them to avoid losing their jobs.
Without a doubt, surely the higher the expense of the crisis will be. Then again, jobless
individuals will simply be too terrified to even think about checking bank accounts on the off
chance that they have no job. Well as they say, no salary…no money inside the bank! Without
cash, trade would require barter if the situation worsens.

But also to answer the second question, there will be a more slow economic growth due to weak
aggregate demand. If demand-side factors are weak, at that point the economy is bound to
encounter a negative output gap where real GDP is less than potential GDP [ CITATION Pet19 \l
1033 ]. In particular, since most workers have been unemployed in U.S due to this pandemic,
firms have laid off workers due to less revenue they are gaining. Thus, this hinders economic
growth as there is little productivity in the workforce. However, if this economic growth still
continues it is almost certain some may see deteriorating income or in any event, falling
earnings.

In summary, U.S economy was growing steadily before the virus struck. But longer the COVID-
19 remains the more businesses will close down and that will bring about more workers being
laid off, businesses will have less revenue as they contribute to economic growth as they are the
ones providing employment to people.
REFERENCE

Oxford Economics. (2020, April 15). Retrieved April 23, 2020, from U.S Travel org:
https://www.ustravel.org/sites/default/files/media_root/document/Coronavirus2020_Impacts_
April15.pdf

Brauninger, M., & Pannenberg, M. (2000, March). Unemployment and Productivity Research. Retrieved
April 23, 2020, from IZA: http://ftp.iza.org/dp136.pdf

Miller, C. (2020). The Effect of COVID 19 on the US Economy. A Nation Must Think Before it Acts, 1.

Pettinger, T. (2019, September 18). Effects of Slower Economic Growth. Retrieved April 23, 2020, from
Economics Helping to Simplify Economics:
https://www.economicshelp.org/blog/149782/economics/effects-of-slower-economic-growth/

Shambaugh, J. (2020, March 23). FAQ on the economic impact & policy response. Retrieved April 23,
2020, from UP FRONT: https://www.brookings.edu/blog/up-front/2020/03/23/covid-19-and-
the-u-s-economy-faq-on-the-economic-impact-policy-response/