The consensus is that the coronavirus outbreak will cause a negative supply shock as well as a negative demand shock in the first wave to the world economy.

a) Develop a simple model to show that the spread of the virus might cause stagnation. Find the underlying reasons behind that supply and demand shocks in the short run and show them graphically (Use the Keynesian cross first to show what factors impacted for the AE curve to shift, and eventually shift AD curve as well and then move to AD-AS equilibrium and show both demand and supply shifts)

b) The reduced supply and demand for products produce direct consequences to the price levels in both national and international markets. Briefly discuss the possible impacts on price level on the overall price level in aggregate economy.

c) Do you think restoring the macroeconomic equilibrium to the full-employment level or at least closer to that in the long-run should come with a market clearing mechanism or government mechanism? Please support your argument through necessary graphs and logic.

d) From relevant newspaper sources, find out how Bangladesh Government is responding to mitigating the impact of Covid-19. Briefly analyze the fiscal stimulus package.