Extended Essays 2021

Looking back at 2020, it is purely due to the collapse of the real economy, the frustration of

consumer information, and the lack of funds to continue to support. In this case, the monetary

policy can be implemented to restore consumer information and ultimately help GDP

recover.

Then, on the other hand, the unemployment rate in 2008 may be able to return directly to an

average level with the help of monetary policy. However, the recovery of the unemployment

rate is hard to achieve in 2020 since the epidemic continues to have an isolation effect.

Moreover, as shown in Table 4, the government began to implement monetary policy in

March. It began to exit in April, the second quarter, but the market did not respond until the

third quarter, which means it also takes time for funds to enter the market. In addition, for the

real economic recovery, such as 2020, the funds in 2020 will help the economic system not

necessarily flow to the real economy. However, they may flow to the stock market and

capital market.

In addition, while monetary policy supports the federal government's expansion of monetary

spending, it could lead to a continued depreciation of the U.S. dollar, which could

significantly increase global primary product prices and significantly reduce the market value

of the U.S. foreign debt. This led to excess liquidity, which hindered the decline of economic

growth.

Furthermore, the monetary policy does not consider the supply side. As shown in Diagram 4,

if there is the supply-side effect during the epidemic, monetary policy alone will have

limitations and lead to overuse. Still, other alternative solutions can be used, such as fiscal

policy.

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