Many countries experienced a recession in the first quarter of 2020 as a result of the COVID-19 pandemic. Beginning with an initial equilibrium in the fixed-price IS-LM model for a country with no foreign sector, investigate the impact of the pandemic on output and employment by demonstrating how the IS and LM curves would have shifted if policymakers had not intervened. Discuss how the pandemic affected consumer and business demand, as well as which curves shifted and in which directions (indicated by arrows) as a result. Show how the various policy interventions reversed the IS and LM curves on the same graph.
Explain and graph at least 3 lines to explain this question
