The Covid-19 can be considered as a big "shock" to the Canadian economy. Show how the economy will be impacted using the AS-AD model (with diagram). In your answer, you should:

mention what components of Aggregate Demand are expected to be impacted, and why clearly demonstrate changes in the AS-AD diagram with proper labels talk about the impact on Canadian GDP, prices and unemployment

b. According to the AS-AD model, how would the economy adjust itself "naturally" in the long run following the Covid-19. Show the adjustment process in the diagram.

c. What can be the challenge with the natural long-run adjustment process? What do you think can be another approach to get the economy back to its potential GDP?