Combined Negative Demand and Supply Shocks The Covidrlg pandemic recession lasted. according to the \"BER. two months [March and April EDEE}. It was the deepest recession since WWII and was caused by a combination of negative supply and demand shocks brought about by the lockdowns in early $22. The repercussions where felt across the economy. In this exercise we will use the model presented in class to understand how the economy 1uviznuld have reacted to these negative shocks had the government and Federal Reserve not done anything about it. a. Negative Supply Shock Let us study rst how the recession would have taken place if the only driving force had ban a negative supply shock caused by supply chain issuesr but demand had not dropped. This could be for instance the case of Taiwan. where [OWE-19 was very controlled and life for most citizens continued as normal, but due to Iockdowns in other countries, they faced lack of components and a rise in prices of imported parts and goods. This supply chain disruptions meant higher costs of production and a negative supply shock. Explain using the model [draw the graphs for the 3 markets) and words what would have happened to the main macroeoonomic variables in the economy if the CDVID-IQ pandemic recession would have been caused only by a temporary negative supply shock. (25 points]