FIGURE 27.5 Long-run The Aggregate Demand- aggregate Aggregate Supply (AD-AS) supply LRAS Diagram. This diagram has three ele- A Short-run ments: the AD curve, which aggregate shows how short-run equilib supply SRAS rium output depends on infla- tion; the long-run aggregate supply (LRAS) line, which marks Inflation rate the economy's potential output Y*; and the short-run aggregate supply (SRAS) line, which shows the current value of inflation IT. Short-run equilibrium output, Aggregate demand AD which is equal to Y here, is determined by the intersection of the AD curve and the SRAS line (point A). Because actual Y Y * output Y is less than potential Output output Y*, this economy has a recessionary gap.Assuming that the SRAS is horizontal and the economy is initially in its long run equilibrium+ + Country A is an export-led economy, i.e. a significant portion of the real GDP of this country is from exports. The Covid-19 pandemic greatly disturbs the logistic and thus transportation cost surges up in Country A. Furthermore, the Covid-19 also reduces this country's export. How may the Covid-19 pandemic affect Country A's inflation rate and real output in the short-run equilibrium? Briefly explain your answer with an aggregate demand - aggregate supply diagram.+