COURSE: BUSINESS ECONOMICS

PROJECT: COVID-19: The Global Shutdown

Instructions for the submission:
● Please maintain the following: Font - Times New Roman, Font Size - 12, Line Spacing -
1.5

Name HIMANI SAKHRAM MALI

Question 1

The OPEC member countries collectively agree on how much oil to produce, which directly
impacts the ready supply of crude oil in the global market at any given time. OPEC
subsequently exerts considerable influence over the global market price of oil and,
understandably, tends to keep it relatively high in order to maximize profitability.

The term Organization of the Petroleum Exporting Countries (OPEC) refers to a group of 13
of the world’s major oil-exporting nations. OPEC was founded in 1960 to coordinate
the petroleum policies of its members and to provide member states with technical and
economic aid.1 OPEC is a cartel that aims to manage the supply of oil in an effort to set the
price of oil on the world market, in order to avoid fluctuations that might affect the
economies of both producing and purchasing countries.

Question 2
Question 3

Cyclical unemployment is one of the five unemployment types which are recognized by
economists. Apart from cyclical unemployment, there are structural, and frictional types of
unemployment.

Cyclical unemployment is directly related to the macro-economic situation in the economy. It

would rise at a time of recession, while reduce when the economy starts recovering. The
economic activity tends to move up and down and cannot be classified as linear.

When the economy slows down, it will reduce the overall demand, reduce consumption, and
that would lead to production cuts in various industries. We have seen that the auto sector
 resorted to production cuts at a time when the demand for cars were slowing due to higher fuel
prices and economic slowdown.

The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it
have plunged the global economy into a severe contraction. According to World Bank
forecasts, the global economy will shrink by 5.2% this year.1 That would represent the deepest
recession since the Second World War, with the largest fraction of economies experiencing
declines in per capita output since 1870, the World Bank says in its June 2020 Global
Economic Prospects

Question 4

The economic crisis has prompted an immediate response by governments to avoid a collapse
of the financial and banking systems and limit the economic effects of the credit crunch. Such
policies aim at stabilising the economy and initiating a rapid recovery. But policies also need
to ensure that the recovery is durable, i.e. based on sustainable growth. The crisis should not
damage the drivers of long-term growth, but should instead be used as a springboard to
accelerate structural shifts towards a stronger, fairer and cleaner economic future. Failing to do
so might lead only to a temporary recovery as the macro-economic and structural roots of the
current downturn would remain untouched. This implies integrating long term concerns in the
short term policy packages currently assembled by governments and implementing specific
policies aimed at strengthening the supply-side of the economy.

While the Reserve Bank of India is carrying out multiple open market operations and repo rate
auctions to provide long-term liquidity, the situation warrants more concrete measures as
businesses have already started incurring losses post the decision of a complete lockdown
across the country. And when they won't be able to generate cash, they won't be able to pay
their dues to banks or NBFCs. Bankers and economists believe that the Reserve Bank is a tad
behind its counterparts in announcing measures to curb the impact of the ongoing C-19
pandemic.