Question
The government has recently announced a massive increase in support for the economy as a response to the COVID-19 virus. (i) Using an appropriate and
The government has recently announced a massive increase in support for the economy as a response to the COVID-19 virus. (i) Using an appropriate and fully labelled diagram, trace out the dynamics of adjustment that are likely to occur when moving from the original (pre-virus) equilibrium level of output/income to a new (post-government intervention) equilibrium. (ii) Using the same diagram, explain what other responses there might be to other components of Aggregate Demand and how they might affect the final equilibrium achieved by the economy
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