Question 1: Susceptible-Infected Recovered Model: Basic Reproduction Number (R0) and Effective Reproduction Number, R (t)
In connection with the Susceptible-Infected-Recovered Model, the Basic Reproduction Number denoted as, Ro, provides fundamental
information about the anticipated number of individuals who could be affected by a single case of infection. In terms of the COVID-19
pandemic, Ro could be considered the expected number of individuals who could be infected by the virus through a single case of
infection. The justification of the Ro in the case of COVID-19 is that all individuals are vulnerable to the virus. This essentially means that
a single case could spread and affect other individuals. On the other hand, the Effective Reproduction Number denoted as R (t) provides
crucial information about cases of secondary infections that could emerge on vulnerable and non-vulnerable persons.
In an economy with a large number of susceptible persons, public health measures have a direct negative correlation with R (t).
Measures such as mitigation and suppression strategies would play instrumental roles in reducing the potential cases of secondary
infections among susceptible persons. Besides, the sudden arrival of an effective vaccine or an effective anti-viral medication would
have a major impact on R (t) by reducing or preventing potential cases of secondary infection among vulnerable persons.
In the case of Canada, one of the major ongoing challenges emerging with regard to the control of R (t) is based on the fact that there is
a large number of vulnerable persons. There is a significantly high number of older persons, a large number of people with chronic
medical conditions, and many people with immunocompromised health. This category of individuals are vulnerable to secondary
infections, therefore, making it quite challenging to control R (t).
Question 2: An Argument that Justifies COVID-19 shock as ‘demand’ shock
COVID-19 has affected communities across the globe differently. It created a sudden change in various ways of life, including social
interactions. Besides, this pandemic had a massive impact on the global economy creating a need for households to make significant
adjustments on their ways of life. It has also been cited as a form of a demand shock. This argument is founded on the fact that the
pandemic has created a sudden increase in the demand for certain resources. In the healthcare industry, for example, there has been a
sudden surge in the demand for emergency medical and intensive care medical equipment. The demand for personal protective
equipment such as masks, safety gloves, and aprons also increased sharply within a short period.
On the other hand, the sudden increase in the rate of supply of certain medical equipment such as masks to various parts of the world,
for example, the donation of medical supplies to from Europe to Africa has been used to justify the COVID-19 shock as a form of
An increase in GDP is a crucial indicator of economic development. A rise in GDP is usually associated with deflationary effects. It is
characterized by a reduction in the prices of commodities. In this perspective, a negative correlation between GDP and price level for
the months following the COVID-19 shock in March 2020 would be a fundamental indicator of the COVID-19 shock as a form of supply
or demand shock.
Question 3: Recession in the Canadian Economy
The Canadian economy could potentially assume a V-shaped recovery path following the outbreak of COVID-19. It is a common path
assumed by many economies after suffering a sharp decline. The country’s economy could recovery rapidly given that many companies
would resume operations and open or expand employment opportunities. Also, productivity would rise sharply as consumers resume
their normal ways of life supported by access to employment or revenue generation opportunities. In this regard, there would be rapid
changes in consumer demands, as well as expenditure, leading to improved performance among businesses. The country’s GDP could
also rise sharply within the first few quarters, leading to a reduction in the prices of commodities.