Question

1. What are the impacts of the COVID-19 (Coronavirus) pandemic on aggregate demand, aggregate supply, and equilibrium real GDP in the United States?

Answer 1

Aggregate demand is decreased because of reduction in consumption and investment. Due to the pandemic, consumption of most of goods and services has reduced as consumers are not going out. New investment has also reduced because of lack of demand. Aggregate supply has also suffered because of supply chain obstacles resulted due to the pandemic.

both the aggregate demand and aggregate supply curves are shifting to the left in the goods market. Price level is not likely to change much but real GDP will decline dramatically.