4.The Corona flu virus going around the world, and the World Health Organization may declare it a

pandemic. A Canadian study estimated that a flu pandemic would reduce annual GDP growth by up

to 1 percentage point in the pandemic year. For example, if GDP growth was expected to be 3

percent in 2020, then a pandemic would reduce GDP growth to 2 percent

A. Fewer workers are available during a pandemic because people get sick, die, need to care for others

who are ill, or avoid work in fear of getting the illness. If fewer people work, what kind of shock is this?

B. Consumers may reduce face-to-face transactions in fear of getting the illness. What kind of shock is

this? (1 mark)

C. Economists may come up with different GDP impacts, depending on how quickly they think markets

adjust in each of the four marketsinput, output, international trade, and loanable funds. If economists

are from the "YesMarkets Self-Adjust" camp , how would they think each of the markets quickly

restores the match between aggregate supply and aggregate demand after a negative demand shock that

causes a recessionary gap? (4 marks