Impact of Global Lockdown and Pandemic on Aggregate Demand and Supply

BUSINESS

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................3
QUESTION 2..................................................................................................................................3
QUESTION 3..................................................................................................................................3
QUESTION 4..................................................................................................................................4
QUESTION 5..................................................................................................................................4
QUESTION 6..................................................................................................................................4
QUESTION 7..................................................................................................................................5
REFERENCES................................................................................................................................6

QUESTION 1
a. Both aggregate demand and aggregate supply has seen a heavy decline due to global lockdown
and pandemic situation.
b. The price elasticity for essential goods is elastic as demand has increased more than prices.
c. Market has failed completely in terms of financial, political and economic context.
d. GDP is estimated to contract by $34.2 billion of 1.32% ((The possible economic consequences
of a novel coronavirus (COVID-19) pandemic, 2020)).
e. The durable industry despite being worst hit is expected to bounce back and the non durables
industry will continue to function as it is now but with better scale.
f. Labour force participation rate is expected to decrease as the labourers will retreat due to
Covid- 19 and consequently rate of unemployment will rise.
g. Federal budget is expected to be at an increased deficit than the expected one.
QUESTION 2
a. Annual wage rise in 2% means nominal income i.e. income that is not adjusted with the
inflation rate increases by 2%. This means union would have anticipated the change in inflation
rate to be less than 2% but the inflation rate must have risen unanticipated leading to loss in the
real income which is inflations adjusted income i.e. income after inflation (Ahmad and et.al.,
2020).
b. The inherent utility or value of the good that it is giving, and,
My income levels at present.
QUESTION 3
a. Labour participation rate indicates the rate at which employed or unemployed people are
actively participating in the employment of country (Rahman and Kuddus, 2020). Increase in the
unemployment rate by 0.2% indicates that total number of unemployed people looking for
employment. There is no error in the report.
b. Elimination of human travel agents due to technology disruption.
Language translators.
c. A 0% unemployment rate is unacceptable as it can create inflationary pressure, lower
technological advancement and bring redundancy in economy.
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