Covid-19 pandemic has several economic impacts. First of all, it decreased the quantity of capital (physical and human). Moreover, consumption, expected future income, expected future profit decreased. Since almost all countries have been affected by the pandemic, foreign income also decreased. Government tries to ease the negative effects of Covid-19 by conducting expansionary fiscal and monetary policy, however, the effect of these policies are very limited that cannot be reflected as a positive sign on economic indicators.

Question:According to information above, use Aggregate Demand and Aggregate Supply relation. Don't forget to addShow the effects of Covid-19 on Price Level and Real GDP. Comment on the new state of the economy whether it is at full employment or inflationary gap or recessionary gap.