Question 2.

a) Australia is bouncing back from recession caused by Covid 19 along with many other economies of the world. What steps Central Bank of Australia has taken during this time. Please explain in one hundred and fifty words. Thank you.

b) Think about Australian economy, which was initially at equilibrium level of real GDP. By using an aggregate demand and aggregate supply diagram, explain the short- run consequences of the following actions upon an economy, you do not need to draw the diagrams:

- Central bank increased the interest rate

- Decrease in taxes

- Increase in subsidies

- An appreciation or rise in the foreign exchange rate value of the economy's

currency;