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The coronavirus outbreak has brought the US economy to a sudden halt due to social distancing. To counter this negative shock, the US Federal Reserve
The coronavirus outbreak has brought the US economy to a sudden halt due to social distancing. To counter this negative shock, the US Federal Reserve (FED) has launched unprecedented expansionary monetary policies to fight against the widespread damage of this pandemic. Based on the ISOLM model, analyze the effects of each shock to major macroeconomic variables of the US economy. Moreover, what are the joint effects of the virus shock and monetary policies on those key variables? In an AD/AS model, what is the joint effect on inflation?
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