The coronavirus is currently wreaking havoc on the world economy. There are many reasons for this, so let’s simplify by focusing on just one. Suppose the primary effect of the coronavirus is to create “uncertainty”, which leads investors to increase their demand for “liquidity” (i.e., it increases the demand for money relative to other assets). Explain how this would affect the Indian economy. What happens to the output and the value of the Rupee? US policymakers are currently debating whether to respond by cutting interest rate or increasing government spend- ing. Which of these policy responses would India favor? ( *Hint* : Indian Currency floats against Dollar)