Consider how the prioritisation by the Singaporean government to act on climate change (though measures such as agreeing to targets that reduce countries' greenhouse gas emissions) has economic impacts in both the short and long run.

(a) Illustrate the short-run impact of cutting greenhouse gas emissions for the Singaporean economy using the Aggregate Demand -Aggregate Supply (AD-AS) model. Assume that the economy was initially in operating at its potential level of output represented by Y*. Explain what is happening in your diagram and highlight any trade-offs the economy faces between growth and meeting carbon reduction targets in the short run