Question

what is affect of covid 19 on the brazilian economy ? using aggregate demand and aggregate supply model analysis.

Answer 1

There is a strong and negative impact of COVID-19 pandemic upon the economy of Brazil. With the initiation and spread of the COVID-19 pandemic, government took measures of social distancing, closure of businesses dealing with non-essential goods and services, closure of schools, colleges and universities and many other business activities as a part of the partial lockdown in the country of Brazil. It caused the unemployment rate to increase as firms either laid off workers or reduced the working hours and or salaries. It led to the decrease in purchasing power and aggregate demand decreased. It made a leftward shift in the aggregate demand in the Brazilian Economy and real GDP decreased and growth became negative. It is vindicated by the fact that GDP growth rate by the second week of July, 2020 is -5.95%, though negative growth rate took place since last week of March, 2020. Unemployment rate is also over 12% after the spreading of COVID-19 pandemic  in the country of Brazil. Inflation rate also is at the level of 1.88% in the month of May, 2020. It is a decrease from the inflation rate of 4% in the month of Feb. 2020. It Showed that real GDP of the Brazil has decreased as a cumulative negative impact of COVID-19 pandemic.

A symbolic AD-AS diagram is shown as follows: