In 2020 the Australian Government responded to the economic impacts of COVID-19 by implementing the following economic policies:

1.Increase in transfer payments (pensions) to the unemployed and pensioners;

2.Decrease in income taxes on individuals;

3.Increase in subsidies and tax allowances to Australian firms.

Required:

Explain how the above policies impact on aggregate demand, the equilibrium price level and Real GDP of the Australian economy