Thank you, please answer the following questions, there is also the question of the need pictures please attach pictures
3. The COVID-IS' Vaccines Global Access {COVAXJ campaign is an initiative aimed at providing equal access to vaccines for everyoneregardless of whether you currently reside in a rich or poor country. The core argument is that since no one is truly safe until everyone is fully vaccinated, there is Strategic comelementarigy 'orn vaccine sharing between rich and poor counties. Left to market forces one, there would be coordination failure. Answer the following questions, relating the COVAX arrangement to the Keynesian coordination-failure model covered in the course. Imagine counties as a group of rms that could coordinate or fail to coordinate. [24 Points] 5} Graphically illustrate the coordination failure model, using the rate of vaccination in the world {considered as a single country) as a sunspot variablehigher vaccination rate drives optimism of faster economic recovery. Carefully explain what wouldconstitute a bad equilibrium vs good equilibrium. [5 Points] Suppose that since consumer condence {waves of optimism and pessimism) and economic activity are driven by the rate of vaccination, the central bank changes money supply depending on vaccination progress. With the aid of a diagram, discuss how such vaccination-contingent monetary policy stance could explain the procyclicality of money in the Keynesian coordination-failure model illustrated in part A. [8 Points] Starting with a pandemic-driven high government spending scenario, graphically display and carerlly explain how a subsequent coordinated scal contraction {reduction in govemment spending) might affect output and employment. In what ways the scal contraction could worsen or improve welfare? Make sure to carerlly label your diagrams. [7 Points] Assume the world is divided into two group of countriescountries with no vaccine access {poor countries) and countries with rll vaccine access {rich cormtries)with no vaccine transfer from rich to poor countries. Explain why the lack of coordination behveen countries in this scenario would mean that the coordination-failure model as discussed in parts A to C cannot work. What is the key mechanism underpinning the model? [4 Points] 4. Using your knowledge of the New Keynesian model covered in the course, answer the following questions: [24 Points] a) Suppose that COVID-related surge in investment and application of new technologies drive an increase in current total factor productivity. Explain what the equilibrium effects are on the economy, assuming no change in the central bank's interest rate target. Assume that the output gap is initially zero. [4 Points] b) Suppose that despite the surge in new technologies, total factor productivity is expected to fall in the future, largely due to stagnant wages and insecure jobs across the economy. Assuming nominal interest rates have reached the zero-lower bounds and the central bank does not engage in any form of unconventional monetary policy, graphically illustrate and discuss how fiscal policy could stabilize the economy. [6 Points] c) Assume that some of Australia's capital stock was destroyed by recent waves of climate-induced natural disasters. Assuming a zero-output gap before the disasters, explain how monetary policy could be used to stabilize the economy. Make sure to include an appropriate diagram in your answer. [5 Points] d) Some prominent economists are warning that current large levels of COVID-related government spending would lead to higher inflation sooner or later. what should the central bank do if the anticipated future rate of inflation goes up? Discuss with the aid of an appropriate diagram. [4 Points] e) Due to rising fiscal deficits, some economists are projecting that the natural rate of interest wouldrise. Graphically illustrate and discuss what the central bank should do if the natural rate of interest rises, explaining any potential trade-offs facing the central bank. [5 Points]
