With the help of a diagram, outline the long run effects of the coronavirus pandemic on the United Kingdom if there is no government intervention
If the UK government chooses not to intervene in reducing th~e transmission rates of the coronavirus, we would see a larger increase in cases over a shorter period of time than if there was intervention in place to reduce transmission. This would lead to health services being unable to meet the demand and less patients receiving the necessary treatment. This would then lead to an increase in the number of deaths caused by the virus. This would then lead to a reduction in the size of the labour force. Since labour is an economic resource. A reduction in its size would cause a leftward shift in the long-run aggregate supply curve (LRAS1 to LRAS2). This demonstrates a decrease in the productive capacity of the UK over the long run. Assuming that aggregate demand (AD) doesn't change, we can infer from the diagram that there is a reduction in output (Q1 to Q2) as the country loses its capacity for growth and a increase in the price level (P1-P2) as the labour resource constraint drives up wages . This shows that without government intervention to lower the transmission rates of coronavirus, the UK will experience higher inflation and lower economic growth in the long-run.
