In a near zero-short-yield financial environment, and confronted with a pandemic, the government shuts down its entertainment services sector and enforces the shutdown by law.

a) Explain whether this shock arises from the supply or demand side of the economy.

b) Discuss the possible effects on financial markets. For example, would you expect yields and asset prices to rise or fall, and why?

c) Discuss whether generic expansionary fiscal and monetary policy could be effective in avoiding a subsequent recession.

d) Considering the zero short-yield environment, explain what types of policies would best address the economic effects of the shutdown.

e) If the government implements the policies you recommend, irrespective of the mix of instruments they embody, explain whether some monetary expansion might always be helpful during the shutdown and recovery period.