Assume that the Government announces plans to lower the cost of energy through its involvement and investment in gas, carbon capture and hydrogen. The announcement is a signal that businesses will benefit from lower energy costs. It also provides businesses with greater certainty about the future with regards to energy policy.

Refer to the AD-AS model. Use the model to explain how lower energy costs and greater confidence about the future will affect Australian businesses and the country's GDP/economy.

Your answer should consider the following

- whether such action comes under monetary policy, demand-side fiscal policy or supply-side fiscal policy and why.

- the direction that AD and/or AS curves will shift.

- if this has an expansionary or contractionary effect on the economy and why.

- what the new GDP, CPI may be based on the data in the given model.