Monetary policy
Monetary policy is a crucial economic strategy incorporated by the central bank in high cases of unexpected recession with the primary objective of restoring and maintain the economy. Central banks may as well engage in the process of control the supply and circulation of money. Moreover, the central bank may engage in ordering the reduction of interest rates to avoid the oppression of business and people (Labonte, 2020). Fiscal policy is interconnected to monetary policy; however, it is conducted by the government. For instances, the government may change how it spends its funds and tax rates through reduction. Both fiscal and monetary policies are very significant in controlling and restoring the economy through an increase in employment.
The current threat of Corona Virus, commonly termed as COVID-19, has shaken the world and brought majors activities to a standing hill. All governments of the world have shut down their normal operations, and turn their focus on the pandemic that has reduced the globe to a small village. As per Labonte, (2020) economy of the world has been forced to undergo severe unexpected recession as most human activities have been stopped with the bids of curbing the spread of the deadly virus facing the world. Governments globally have resorted in ways of ensuring they restore and maintain their economies. The federal government have projected 24% rate declines of GDP and unemployment rate rising by 41% (Lowrey, 2020). The health sector has pushed the economy to the recession, and the Fed has intervened through both monetary and fiscal policies since increasing aggregate demand is crucial for the survival and sustenance of an economy.
Global governments need to be keen on saving their economies. Labonte (2020) demoted that Federal government has ensured they maintain their mandated of employment provisions and setting interest rates at 0%, increasing borrowing, and money liquidity. However, this is not saving the economy but sustain it for a short-term. Should the epidemic last more worst is expected as people at limited at homes with no work. The expectation on the Fed to provide for its people and control will not benefit the economy from the impending recession if people are not going to work.