Question 1 (10 marks)

a. The recent global outbreak of Covid-19 has major economic consequences. Using the AS-AD model, show what will be short-term impact of this crisis on the Canadian economy. Discuss some reasons why this impact may happen

b. Suppose the Canadian government wants to use Fiscal and Monetary policy to stabilize the economy during the time of this outbreak. What actions should it take in terms of Fiscal Policy? In terms of Monetary Policy? Discuss how these policies work

c. What have been some of the fiscal and monetary measures already taken by the Canadian government?