Answer to Question #245128 in Macroeconomics for Q.v

Question

Economic effect of covid 19 on inflation in South africa.

Answer 1

Solution:

Covid 19 has resulted in massive shocks to both demand supply in South Africa leading to high inflation levels. The growth in aggregate demand has resulted in a reduced availability of these products causing higher prices leading to high inflation. Similarly, the supply of products has been greatly affected and hence lack of enough products to cover the entire population in need. This will push up the general price levels of goods and services leading to inflation.