In Chapter 15, you learned that short-run fluctuations in output, employment, and prices could be caused by demand shocks or by supply shocks. The Coronavirus, also known as COVID-19, pandemic hit the U.S. economy in early 2020.

• Would the pandemic be considered a demand shock, supply shock, or both? Why? Explain the rationale for your choice of the particular type(s) of shock(s) that the pandemic represents.
• Based on the available data, are the observed effects of the pandemic on the U.S. economy consistent with the predictions of the aggregate demand and aggregate supply model? Why or why not? Explain carefully and refer to data on the three key macroeconomic variables, GDP, unemployment, and inflation.