Answer the following questions by assuming that initially the world economy is in its long run equilibrium. Please notice that inflation rate should be on y-axis in aggregate demand-supply diagrams.

"The global economy will contract by 3% this year as countries around the world shrink at the fastest pace in decades, the International Monetary Fund says. The IMF described the global decline as the worst since the Great Depression of the 1930s. It said the pandemic had plunged the world into a "crisis like no other" (BBC News 14 April 2020)."

a. With reference to the news above and with the help of an aggregate demand-supply diagram, briefly explain how the Coronavirus pandemic may reduce equilibrium global output in the short run.(8 marks)

"The plunge (of crude oil price) started after Russia rejected a proposal by OPEC to cut its crude oil production by 1.5 million barrels a day. In apparent retaliation, Saudi Arabia cut prices for buyers over the weekend (nbcnews March 10, 2020)"

b. With the help of an aggregate demand-supply diagram, briefly explain how a sudden crude oil price plunge may affect equilibrium global output in the short run.

(8 marks)

c. With references to the two pieces of news above and assuming that the prediction of IMF is correct, briefly explain how the Coronavirus pandemic and crude oil price plunge may affect equilibrium inflation rate and global output in the short run and in the long run. Please illustrate your answer with aggregate demand-supply diagrams.

(9 marks)

d. Statistics from World Development Indicators show that final consumption expenditure (% of GDP) of China in 2018 was 53.4% and that of the United States in 2018 was 82.3%. In 2019, China imported 10.12 million barrels per day of crude oil according to Reuters (Reuters Business News January 14, 2020). In 2019, the US imported 6.795 million barrels per day of crude oil according to data from the U.S. energy Information Administration. Answer the following question based on these statistics.

Which of the two countries, China or the United States, will suffer more from the Coronavirus pandemic and the plunge in crude oil price in terms of its output in the short run? Briefly explain your answer.(10 marks)