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Coronavirus: Impact on the Circular Flow

Geoff Riley

14th March 2020

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Professor Richard Baldwin has adapted the circular flow diagram to identify some of the ways in which the coronavirus shock is impact on the macroeconomy. This is well worth a look especially if you are teaching and studying the causes of and policy responses to external demand and supply-side shocks.

"The economy continues running only when the money keeps flowing around the circuit. Roughly speaking, a flow-disruption anywhere causes a slowdown everywhere."

Read: Keeping the lights on: Economic medicine for a medical shock

More here from Gita Gopinath, Chief Economist of the International Monetary Fund.

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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