Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1 - Modules L3 and L4. Aggregate Demand and Fiscal Policy in Recessionary Times [Suggested word count for Q1: 400 to 500 words or less]
1 - Modules L3 and L4. Aggregate Demand and Fiscal Policy in Recessionary Times [Suggested word count for Q1: 400 to 500 words or less] Australia has been in recession during the first half of 2020 as the pandemic led to a substantial reduction in production and household spending, according to this article: https:/www.theguardian.com/business/groganomics/2020/sap/02/australians-needs-government-support-to-get-out-c"-this-recession- winding-it-back-is-not-en-option In response, fiscal policy in Australia has played an important counter-cyclical role, as pointed out in these articles: https://www.the guardian.com/australia-news/2020/jul/21/jobseeker-payment-economists-on-why-its-dangerous-to-cut-covid- 19-welfare-subsidy https://www.abc.net.awnews/2020-10-06/why-people-spend-save-stimulus-tax-cut-coronavirus-budget/12698520 A. Use the multiplier model to illustrate and explain in some detail how the aggregate demand function will shift due to the pandemic-led "household recession". [7 marks] B. On the same diagram in Part A, illustrate and explain how fiscal stimulus measures are helping to mitigate the macroeconomic shock from the coronavirus. [4 marks]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started