Part 1 (20 marks)
GDP and unemployment
a) Analyse the effects of quarantine on GDP, employment and the unemployment rate. Which
industries are likely to be most affected and which industries are likely to be least affected
by quarantine measures?
b) Choose any country that introduced quarantine as an example. What was its GDP growth
rate in 2018, 2019? (Indicate the source of information.) Is this country likely to be in
recession this year? Refer to two definitions of recession.
c) Are your answers consistent with (general) Okun’s law?
Part 2 (20 marks)
Inflation
a) What do you think would happen to inflation in your chosen country in the coming year?
Explain.
Demand components: Consumption
b) What factors usually determine individual consumption? In light of these factors analyse
how the situation with the COVID-19 pandemic is likely to affect aggregate consumption.
Use the theory studied in the course in your answer. You may want to provide some
examples for your chosen country.
Part 3 (20 marks)
Demand components: Investment and net exports
Analyse the effects of the COVID-19 pandemic on investment and trade (exports and imports, in
particular). Refer to the theories studied in the course. Provide some examples from your chosen
country. Do you think investment and trade will also be affected after the pandemic is over?
Explain.
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