QUESTION 1

a. summarise the effect the coronavirus has had on the Australian macroeconomy. At a minimum, your answer should include commentary about the effect on Australian GDP, unemployment, inflation and other aspects of the Australian macroeconomy. Support your comments with appropriate economic data.

b. Draw a diagram of the Australian macroeconomy using the aggregate demand and aggregate supply (AD/AS) model before, and then after the virus. Clearly show on your diagram(s) the before and after effects for the macroeconomic variables discussed in question a.

c. The Federal Australian Government was very aware of the effects of the virus on the Australian economy. Explain the fiscal policy actions the Government undertook to combat the economic impact of the virus. Using your diagram from question b, show how the government action should affect the Australian macroeconomy. Comment on how successful the government action has been, and identify any weaknesses associated with it.