Question 2a) Suppose that at the same time the government pursues an expansionary fiscal policy, the Reserve Bank of Australia pursues an expansionary monetary policy. How might an expansionary monetary policy affect the extent of crowding out in the short run? Use appropriate graph/s to answer this question.

QUESTION 2b) Despite the benefits of high economic growth, there are also potential costs. Briefly analyse the potential costs of high economic growth? How can policy makers use monetary policy and fiscal policy to mitigate these costs as well as achieve sustainable economic growth?