(a) Federal governments can use their budget to stabilise their economies during shocks such as Global Financial Crisis of 2008 and COVID19 pandemic. Discuss how the federal budget served as anautomatic stabiliserfor the Australian economy (or another country's economy of your choice).

(b) Discuss why it is possible to have real GDP falling below potential GDP between two time periods when the price level is rising. Could this happen after the COVID19 crisis is contained in Australia?