Question

What is the main macroeconomic stake that could prevent a rapid V shaped recovery?

Answer 1

V shaped recovery is when there is a brief sharp slowdown such as in the case of the pandemic and there is a sharp recovery soon afterwards.

Main macroeconomic stake would could prevent a rapid V shaped recovery is less investment by the firms because of lower consumption in the economy and government not helping the economy enough during the crisis through increased government expenditure. This could prevent a V shaped recovery cause if government doesn't provide the necessary stimulus in the form of increase in money supply and investment, thereby leading to higher consumption, then people won't have money to spend and demand won't recover.

This will ultimately reduce the output as firms don't have enough demand for their goods and services which will lead to bankruptcies and then the economy suffering a great deal because of the repercussions which then take longer to recover, as banks will suffer if businesses are not able to repay debt, this will lead to people's deposit money being in greater risk, which will essentially lead to the entire economy collapsing and no signs of a V shaped recovery happening in the economy.