Question 5 - This question has 2 parts: Part (a) 4 marks, Part (b) 6 marks, for a total of 10 marks. Define the government purchases multiplier in words or in reference to the formula and explain the concept behind multiplier using a scenario example. (4 marks) (b) Consider the following Monetary Policy action and discuss how it will influence the domestic economy in the short-run. Also identify one graph that most accurately reflects the effect on the AD-SRAS-LRAS model in the short-run (SR). (6 marks) Monetary Policy Action: The Reserve Bank of Australia (RBA) lowers the cash rate over several consecutive months during the Coronavirus pandemic, ceteris paribus. LRAS1 LRAS1 LRAS1 Price level Price level | Price level SRAS1 SRAS1 SRAS1 SRAS2 PL2 PL2 PL1 PL1 PL1 PL2 AD2 AD2 AD1 AD1 AD1 O YFE RGDP Y1 Yz YFE RGDP RGDP YFE Graph 2 Graph 3 Graph 1