Question

In late February 2020, Kuwait government took some early initiatives to control the Coronavirus pandemic. For Kuwait, the pandemic is considered to be a Double-Edged Sword, as the lower demand for oil has reduce the nation’s income and has paralyzed the domestic economic activities. Despite government support, many companies continue to lay off workers, which may lead to further reduction of national income.

Q1.​To support the domestic economic activities, Kuwait government requested the banks to freeze the collection of mortgage payments or loans installments for six months. Using graphs explain how this policy will impact Kuwait economy’s loanable funds market, net capital outflow and foreign currency market.

Answer 1