Consider monetary policy options that could be implemented in the case of the COVID recession. Then, compare them to the fiscal policy options that you discussed previously (Unit 2.2). Which would be more effective? Which would be better for society?

*Previously discussed in Unit 2.2 -this should help answer above question.

The fiscal policy approach used by many countries was government expenditure, although in some cases we had tax cuts on various sectors. Government expenditure is always key because of its nature of stabilization. Moreover, the spending multiplier is always more than the tax multiplier thus why most countries prefer government spending. Government spending happens in various ways, subsidies, incentives and unemployment benefits to some extent, and transfers.

What more should have been done is to ensure the economy stays open so that all the sectors affected regain and makes money, the government could have invested more in ensuring services and goods are being given to the right people so as to boost those with lower income.

The costs of not doing more.It led to insecurity because people turned into crimes for a living. There was an economic slow down since one sector was at the government help and there was more national saving for the future instead of consuming.

Less government spending on companies and firms reduced productivity, people lost their jobs because of the high cost of production. Prices of goods and services increased marking high inflation. The poverty gap increased because of no income.