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This problem deals with the lock-down policy (physical distancing and self-isolation) implemented in Canada to slow the spread of contagion of the COVID-19virus (coronavirus).The partial

This problem deals with the lock-down policy (physical distancing and self-isolation) implemented in Canada to slow the spread of contagion of the COVID-19virus (coronavirus).The partial and total lock-downshave caused a significant (exogenous) decrease in the level of consumption and investment in Canada.

Check if the following statement is true or false, "All else equal, the exogenous decrease in consumption and investment (i) hasshifted up the aggregate demand curve in the Keynesian cross diagram and this, in turn, (ii) has decreased the level of income (output) in Canada."

No credit without explanation. Use a Keynesian cross diagram to support your answer and explain why the aggregate demand shifts and why and how the level of income changes. In addition, use an equation of the aggregate demand to support your intuition.

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