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Coronavirus: Impact on the Circular Flow
14th March 2020
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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