AD-AS

Question 1 : AD-AS The Covid-19 pandemic has forced many countries to partially shutdown their economies to prevent the spread of the virus. This has reduced output drastically causing a negative shock to the supply of goods in Jamaica. Jse a carefully labeled diagram consisting of a long-run aggregate supply curve (LRAS), a short-run aggregate supply curve (SRAS), and an aggregate demand curve (AD) to illustrate the effect this negative supply shock in the short run and the long run. Please explain the process from the short run to the long run. (10 marks) .'o possibly minimize the effects of the shock, assume that instead of allowing the market to adjust on its own, the government decides to use monetary policy as a stabilization tool. Use a carefully labeled diagram to illustrate the effect of the shock from part (a) incorporating the government's policy decision. (10 marks)