Government Stimulus Economic Stimulus Package Discussion
Government Stimulus Economic Stimulus Package Discussion
What is an economic stimulus package? How did the governments use this package during COVID-19 crisis ? Explain what it contained and how it can affect you and your family or other families. Give an example.
economic stimulus package is defined as a combination of measures by the government to bolster economic growth and take the economy out of an economic slowdown or recession. Economic stimulus packages during the COVID-19 pandemic were aimed at mitigating the negative impacts of the pandemic on the economy. The COVID- 19 pandemic caused a major global economic depression. According to Li and Liang (2021), following the COVI-19 disease outbreak, most nations have implemented several measures o mitigate the spread of the virus, such as lockdown policies, and closure of schools, shopping centers, and public areas. Nevertheless, these mitigation measures declined household production and consumption and subsequently caused external shocks in supply and demand Government Stimulus Economic Stimulus Package Discussion .
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Siddik (2020) emphasizes that the COVID-19 pandemic had direct harmful effects on the economy in several ways. For instance, stay at home requirements, lockdowns and border closures had a direct impact on the socio-economic life of people. Also, disease-ridden workers who were hospitalized or quarantined could not join the labor force, which had several supply and demand-side consequences. Governments aimed at enhancing investment and consumption by offering stimulus packages, including fiscal support tools like direct benefits, reducing taxes, loan guarantees, and equity injections.
COVID-19 economic stimulus packages are the major economic responses governments are undertaking across the globe to limit the economic and human impact of the pandemic. Countries have used trillions of dollars in stimulus packages intending to save their livelihood and economy. Governments across the globe have commenced numerous stimulus packages such as monetary and fiscal measures targeting servicing and manufacturing industries, health care, and households. For example, South Korea made cash transfers to isolated individuals, rental and income support for medium and small-sized businesses, and consumption tokens to low-income families. Germany provided grants to medium and small business owners who were negatively affected by the COVOD-19 pandemic and improved childcare welfare for parents from low-income families (Siddik et al., 2021)Government Stimulus Economic Stimulus Package Discussion
To assist low-income populations and mitigate the economic fallout caused by the COVID-19 pandemic, the United States enacted a two trillion dollars economic stimulus bill known as the CARES Act. 300 billion dollar stimulus payments were distributed to low-income persons. Eligible persons were given 1, 200 dollars per individual, or 2,400 dollars per married couple, and 500 dollars per child (Li et al., 2021).
An economic stimulus package can affect my family and other families by shoring up households’ demands for services and goods during a recession. A stimulus package allows individuals to keep buying services and goods. This boosts aggregate demand, reducing the length and depth of economic slowdown/ recession and promoting a stronger recovery. For example, my family used fiscal stimulus provided by the federal government to buy food and pay electricity and water bills. As indicated by Li et al. (2021)Government Stimulus Economic Stimulus Package Discussion , although the COVID-19 pandemic has significantly affected the entire United States population’s spending, wealth, and income, the low-income population was hit most by the loss of ob and income during the pandemic, especially after the initiation of state lockdowns.
References
Li, K., Foutz, N. Z., Cai, Y., Liang, Y., & Gao, S. (2021) Impacts of COVID-19 lockdowns and stimulus payments on low-income population’s spending in the United States. PLoS ONE 16(9), e0256407. https://doi.org/10.1371/journal.pone.0256407
Li, S., & Liang, X. (2021). Determinants of the Fiscal Support of Government in Response to the COVID-19 Pandemic. Frontiers in Public Health, 8, 637557.
doi: 10.3389/fpubh.2020.637557
Siddik, N. A. (020). Economic stimulus for COVID_19 pandemic and its determinants: Evidence from cross-country analysis. Heliyon, 6(12), e05634. https://doi.org/10.1016/j.heliyon.2020.e05634 Government Stimulus Economic Stimulus Package Discussion