Explain which of the three policies do you think would be most effective due to COVID-19 in trindad and Tobago? fiscal packages policy decrease in reserve requirements decrease in policy rate
Explain which of the three policies do you think would be most
effective due to COVID-19 in trindad and Tobago?
fiscal packages policy
decrease in reserve requirements
decrease in policy rate
Covid-19 has resulted in demand and supply shocks to the economies. It is caused the economy to slow down. The production and consumption of goods and services has declined. Confidence is low and there is high uncertainty in the economy. Low demand for consumer goods by the consumers and low demand for capital goods by firms and businesses result in decline in aggregate demand. Low aggregate demand causes the price level to decline. Producers are discouraged because of lower prices and thus they reduce production. This causes Real GDP to fall. As production declines, demand for labor also falls and thus we have rising unemployment in the economy.
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