Economic Impact of the Coronavirus – Economics Assignment Help

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Assignment Task :

Summary

The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners.

These payments will support households to manage the economic impact of the Coronavirus.

• The first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive.

• The second payment (announced on 22 March 2020) will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.

A person can be eligible to receive both the first and second support payment. However, they can only receive one $750 payment in each round of payments, even if they qualify in each round of the payments in multiple ways.

The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and veteran payments.

Summary

The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months

Expanded access

For the period of the Coronavirus supplement, there will be expanded access to the income support payments listed above.

• Expanded access: Jobseeker Payment and Youth Allowance Jobseeker criteria will provide payment access for permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus. This could also include a person required to care for someone who is affected by the Coronavirus.

• Reduced means testing: Asset testing for JobSeeker Payment, Youth Allowance and Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.

 

BACKGROUND AND QUESTIONS

COVID-19 (Coronavirus) is having a devastating impact on the health and wellbeing of millions of people worldwide. The World Health Organization recognizedthe virus as a pandemic on 11 March 2020 and cases of COVID-19 have now been reported in over 200 countries and territories.

The COVID-19 crisis has been called a twin health and economic emergency. To slow virus transmission rates and flatten the curve, many governments have implemented lockdowns that restrict the movement of residents. While the nature of these lockdowns varies from country-to-country, the economic consequences are unambiguous. Production, spending, and incomes have declined. Many businesses have been forced to close or reduce their trading hours resulting in increasing levels of unemployment.

During this assignment, you will be asked to apply the economic concepts and models that you have learnt in ECON1020 to a range of COVID-19 related issues.

Q1 Take a typical worker, Jordan. Before the onset of COVID-19, Jordon earned $30 per hour (after taxation) in their job. Assume that Jordan has no other sources of income or savings.

Write down the equation of Jordan’s consumption budget constraint (for a single working day). Using a model with consumption on the vertical axis and hours of free time on the horizontal axis, plot Jordan’s budget constraint. Label all relevant elements of this diagram and state the value of the horizontal and vertical intercepts.  

Q2 Now, add an indifference curve to the model you developed in Q1 and label it IC1. This  indifference curve should be at a utility maximising point and show Jordan’s corresponding choice of consumption and hours of free time. As you have not been given any information regarding Jordan’s preferences, state one assumption that you have made about Jordan’s utility maximising choice and one assumption that you have made about the slope of Jordan’s indifference curve.  

Q3 The arrival of COVID-19 brought financial hardship for Jordan’s employer. As a result, Jordan has had their hourly wage cut by 20% (a common occurrence around the world at the moment). Write down a new equation for Jordan’s consumption budget constraint (for a single working day). Using the same model developed in Q1-Q2, plot Jordan’s new budget constraint. Clearly state the value of the horizontal and vertical intercepts.  

  

Q4 Now, add a second indifference curve to the model you developed in Q1-Q3 and label it IC2. This indifference curve should be at a new utility maximising point and show Jordan’s corresponding choice of consumption and hours of free time. State what has happened to Jordan’s choice of consumption and free time. What can be said about Jordan’s overall level of utility after the onset of COVID-19?

 

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