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Question 4 [20 points] 4.1 Assuming that, due to the Covid 19 pandemic, peoples marginal propensity to save increases in Australia, discuss its effects on
Question 4 [20 points] 4.1 Assuming that, due to the Covid 19 pandemic, peoples marginal propensity to save increases in Australia, discuss its effects on the level of output using both the Keynesian model and the SolowSwan model. [10 points] 4.2 Suppose that the economy of New South Wales was initially in a steady state before a major bushfire that destroyed some of the countrys capital stock. Determine the long-run effects of this on the quantity of capital per worker and on output per worker. Explain, using appropriate diagrams. [10 points]
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