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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
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
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