Question

The spread of coronavirus is causing widespread panic in the stock market where shares have fallen considerable due to fears of the virus disrupting global supply lines. Economic theory would say households may change their consumption and savings habits.

How will households change their consumption and savings habits and what would that entail for the overall economy? Please discuss this in detail

Answer 1

Answer - Due to the panic of the corona virus being widespread in the global market , the trade has under went a considerable downfall. The imports and exports are falling due to which there is a heavy influence on the stock market. Due to the lesser trade , the stock markets are crashing.

The supply of the material is decreasing against the higher demands. Thus the price is also increasing. In this condition , the consumption tends to decrease and proportionately the savings increase.