Assume that the US was at full employment prior to the coronavirus pandemic. Illustrate graphically, using...

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Economics

Assume that the US was at full employment prior to thecoronavirus pandemic. Illustrate graphically, using the AggregateSupply/Aggregate Demand (AS/AD) framework, the full employmentequilibrium price level and GDP. Label the price level P0 and thefull employment GDP as Q0 in your diagram. You will need threecurves: an aggregate demand curve, a short-run aggregate supplycurve, and a long-run aggregate supply curve.
2. Given your answer to part (1), illustrate in the samediagram what effect the coronavirus pandemic is likely to have onthe economy, given the article you read. Identify the newequilibrium price and GDP level and label them P1 and Q1respectively.
3. Explain the rationale behind your answer in part2.
4. What types of fiscal policy responses would makesense at this time, given your answers to parts (2) and (3)? Howwould they affect the diagram you have drawn?
please draw/show your work. and ill give you thumbsup

Answer & Explanation Solved by verified expert

3.8 Ratings (399 Votes)

Initially the economy is at its long run equilibrium whereaggregate demand short run supply SRAS curve long run supplyLRAS curve and output level is Y Economy is at its economicequilibrium of point A where price is P0 and output See Answer

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