The coronavirus pandemic will cause a global recession in 2020 that could be worse than the one triggered by the global financial crisis of 2008-2009, but world economic output should recover in 2021, the International Monetary Fund said on Monday.Use the IS-LM-BP model to explain what this shock will mean for the levels of output/income and interest rates in South Africa.Draw the graph and explain the complete chain reaction. Using the attached recipe to explain and draw IS LM BP graph.

'Recipe' to analyse internal / external disturbances (p. 170) a Step 1: Primary effect a Exactly as in chapter 3 o NOW ADD the effect of these changes in r and Y on the BoP (Bop = CA + FA) Step 2: Secondary Internal effect 1 a Exactly as in chapter 3 o NOW ADD the effect of these changes in r and Y on the Bop 0 Step 3: Summarise steps 1 and 2 Net effect on Y, r, current account (CA), financial account (FA) and Bop D Remember that the primary effect is always bigger than the secondary effect. a Step 4: Secondary effect 2 (Initial BoP adjustment process via Money supply) a If Bop M'/P decreases => ... effect onr and Y OR a # BOP > 0 => M'/P Increases => ... effect on r and Y 0 Changes in r and Y will affect the FA and CA and therefore the Bop a Step 5: Secondary effect 3 (Concluding BoP adjustment via exchange rate) If Bop ... => rand depreciates =3 X Increase M decrease, (X - M] Increase => CA Improves => Bop deficit decreases (Improves) o If Bop > 0 =>... =>rand appreciates => X decrease M increase, (X - M) decrease => CA worse => [BOP surplus decreases] a Process continues until Bop = 0