The overall cost of the UK job retention scheme, commonly known as the furlough scheme, was nearly 70 billion. This has been the UK government most dramatic economic intervention during the coronavirus pandemic.

a. Explain what happened to the consumer spending (C) and investment spending (I) in the UK during the national lockdowns and restrictions.

b. Use a diagram of an Aggregate Demand and Aggregate Supply (AD-AS) model to show the UK economybefore andduringthe pandemic.

c. Discuss how the furlough scheme may help mitigating the economic impact of the pandemic.

d. Show economic effects on aggregate price and real GDPas a result of furlough scheme in the diagram sketched in (b).