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1 Suppose that the economy of a country is currently in a recession because of a fall in aggregate demand due to COVID-19.If policymakers take

1

Suppose that the economy of a country is currently in a recession because of a fall in aggregate demand due to COVID-19.If policymakers take no action,how will the economy progress over time?Explain in words and using anAD-AS framework.

2

Explain whether the following events shifts the short-run aggregate supply curve,the aggreagte demand curve,both or neither.for each event that does shift a curve,use a diagram to illustate the effect on the economy.

i)Dropped the household consumption due to low disposable income during pandamic.

ii)Declined job opportunities abroad due to COVID-19 pandamic.

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