The increasingly tense political conflict between Australia and China has impacted the traditional trade between the two nations. These include moves by China to impose a new anti-dumping tariff on barley, suspensions of certain beef imports and investigations into cheap Australian wine imports amid a coronavirus-led economic slowdown (South China Morning Post, 29/09/2020).

Assume that Australia is already experiencing recession due to the COVID-19 pandemic, bushfires, and drought. GDP has been dragged down particularly due to weak spending by households (a reduction in consumer confidence) and a significant reduction in investment (a reduction in business confidence).

Let's assume that Australia has experienced a negative technological shock (a lower productivity) due to the COVID-19 crisis and the trade conflict between the two nations, Australia and China. Use the WS-PS model to explain how the natural rate of unemployment would change as a result of this decrease in the level of productivity (A).