Evaluating the Economic Shock Amidst the Covid-19 Pandemic (Essay Sample)
Subject: Macro- and Microeconomics
Number of words: 550
Number of sources: 3
Analysis Paper
For the analysis paper you will need to find an article online that describes an event that can be interpreted as a shock to the economy. A shock is something that disturbs the economy's equilibrium. You will then use the basic to predict the effects of the shock on all of the variables of interest: output, the interest rate, consumption, investment, real wages, and work effort. You should discuss the importance of the shock for the economy as a whole; that is, is it a large or a small shock. The paper must be based on an article from the last six months and should include a link to the article. The paper should double spaced, size 12 font, and no more than two pages long. You cannot use graphs or jargon in the paper. Instead, you should write your paper for an audience of intelligent lay people who, by misfortune, have not taken the principles of macroeconomics.
Criteria for Grading:
1) Correct and complete analysis
2) Clarity of exposition to the chosen audience
3) Interpretation and assessment of your article
Analysis Paper: Economic Shock
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Analysis Paper: Economic Shock
Article used for Analysis
Bartholomew, L., & Diggle, P. (2021). The lasting impact of the Covid crisis on economic potential | VOX, CEPR Policy Portal. Voxeu.org. Retrieved 29 October 2021, from https://voxeu.org/article/lasting-impact-covid-crisis-economic-potential.
The coronavirus has had a triple economic shock on the world economy. The demand shock for goods and services was evident and apparent as the population was forced into quarantine. Similarly, the supply shock was also widespread as many businesses and companies were forced to shut down. Every major economy dealt with massive blows to all customer services. Estimates indicated a 6 to 10 per cent decrease in the Gross Domestic Product (GDP) in the first quarter after the spread of the virus started (Michelsen et al., 2020). The virus affected essential industries such as hospitality, manufacturing, travel, and tourism as shares of many organizations fell by almost 40%.
The coronavirus outbreak in early 2020 led to shutting down entire sectors of the economy, mainly those involving personal contacts such as salons and restaurants. The business's closure has resulted in many people losing their jobs and consumers decrease for services offered by the companies (Goy & Willem van den End, 2020). The jobless people reduced their spending and consumption of all goods and services because they did not have adequate disposable income. Further, the coronavirus has also affected investment because most people used their savings for more essential and primary goods and services. Coronavirus has depressed both the supply and demands side of the economy.
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