COVID-19 all around the world has restricted the economic activity. To stop the spread of the virus Pakistan like many other countries adopted the policy of smart lockdown. Shutting down of the industry has created adverse supply shock in the economy. While, the slowdown in business and economic activities the country is in the recessionary phase of the business cycle as the GDP growth for the FY 2020-21 is expected to be -0.2 accompanied by high unemployment and poverty rate. .Using AD-AS model reflect how it might have affected the economy. Explain the impact on price and output. If the policymakers decides to take no action, reflect the impact it is going to create using AD-AS model in the long run. Also, explain the impact on price and output. If the central back opts for increasing money supply, reflect the adjustments using AD-AS in the SR and LR and explain the impact on price and outputKindly answer all the above parts.

The equilibrium price level and the output in an economy are determined by the aggregate dem, and…

Answered: COVID-19 all around the world has…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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COVID-19 all around the world has restricted the economic activity. To stop the spread of the virus Pakistan like many other countries adopted the policy of smart lockdown. Shutting down of the industry has created adverse supply shock in the economy. While, the slowdown in business and economic activities the country is in the recessionary phase of the business cycle as the GDP growth for the FY 2020-21 is expected to be -0.2 accompanied by high unemployment and poverty rate. .

Using AD-AS model reflect how it might have affected the economy. Explain the impact on price and output.
If the policymakers decides to take no action, reflect the impact it is going to create using AD-AS model in the long run. Also, explain the impact on price and output.

If the central back opts for increasing money supply, reflect the adjustments using AD-AS in the SR and LR and explain the impact on price and output

Kindly answer all the above parts.

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