The article explores how the COVID-19 crisis impacts the economy by analyzing supply and demand shocks in different sectors. Negative sectoral supply and demand shocks can lead to both inflation and unemployment, while negative intertemporal demand shocks can cause deflation. The study shows that a combination of these shocks explains the reduction in real GDP and results in a mix of inflation and high unemployment rates. The research suggests that targeted demand stimulus measures are more effective in addressing the economic challenges posed by the crisis.