Question

There is little question that COVID-19 and responses to the pandemic have put the U.S. economy in recession. Use the aggregate demand – aggregate supply (AS-AD) model to demonstrate what has happened to the U.S. macroeconomy and explain why you moved curve(s) as you did.

Answer 1

The corona virus pandemic is an economic emergency like none other which has occurred in the United States and every single significant nation of the world too. Economic lock downs have implied that all merchandise which are a bit much have lost their interest as firms stay shut. The resultant is a decrease in the estimation of products and enterprises delivered and the general GDP of the country which is the last estimation all things considered and benefits is set to decay.

Additionally, because of the gracefully line decrease, individuals gauge that the joblessness levels in the United States could go up by 16% in this quarter.

Here we see two significant charts being the interest diagrams and the gracefully diagram. The interest bend inclines descending demonstrating that as the costs go down along a similar diagram, the Aggregate Demand or Total Demand in the nation goes up as customers purchasing power increments. Further, the gracefully bend is upward slanting showing that as net revenues go up, flexibly increments and the other way around.

In the present circumstance, the Aggregate Demand Shifts to AD2 from AD1. This is a non value change which implies that cost of the items isn't the explanation behind this move but instead, the way that foundations stay shut is the basic integral factor.

Because of this fast decrease, the costs tumble from point P1 to point P2 and the Gross Domestic Product tumbles from point Y1 to Y2 individually.

The Equilibrium point likewise changes from E1 to E2 demonstrating an equivalent decrease in gracefully also.

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