inflation and monetary policy using AD AS frame work

3) .The goods.and services.tax.(GST) was introduced in Australia on.1 .July. 2000. The preceding monthsbefore the.GST.became active.saw a.spike.in. consumption as.consumers rushed to.purchase.goods that they.perceived. would be substantially more expensive with the.GST. The effects of the. surging demand on inflation and the central-bank's.policy.responses.(i.e., cash. rate, the policy interest rate.in.Australia) are illustrated.in.Figure.1. Using the. AD-ASframe-work, explain what happened.to output and the price.level when Australia introduced GST-in the.short run and in the.long.run. For. simplicity, you may assume that the introduction of GST.had no effects on the. supply side of the economy. T Inflation and Monetary Policy % Cash rate 7 Introduction of the GST 6 5 2 Inflation" O JO 1993 1998 2003 2008 2013 2018