Section 1: COVID-19 Impact

Using the(1)Aggregate Demand-Aggregate Supply Model with the Labour Market Model and the(2)Aggregate Expenditure (AE) Model with the Labour Market Model and assuming the Australian economy was at the natural rate of output at the onset of the crisis:

Illustrate the impact of the crisis on the domestic economy using both the(1)AD-AS model and its associated labour market model and the(2)AE model and its associated labour market model. Ensure you clearly label all parts of the diagram, clearly demonstrating the original equilibriums and the COVID-19 outcomes.

Discuss your rationale for the outcome you have demonstrated in your diagrams, ie discuss which components of AD/AS/AE have been affected and why - the basis of the shifts you demonstrated in the diagrams. Explain what has occurred in your labour market models and why.