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Between 2020 and 2022, property prices across Australia have increased by 30% on average. This has affected the wealth of Australian households and firms. Approximately 70 percent of Australian households own or are in the process of purchasing a home. Moreover, many large firms own properties, which are often used to borrow funds for investment. As the value of properties has increased, this has had an impact on the wealth of some households and the amount that firms can borrow. As household wealth and the amount that firms can borrow have increased, household consumption expenditure and firm investment have increased. Use a Keynesian model of the macroeconomy to describe how this increase in consumption and investment would have affected the output in the Australian economy. Be specific and describe what components of expenditure are affected and why.

Between 2020 and 2022, property prices across Australia have increased by 30% on average. This has affected the wealth of Australian households and firms. Approximately 70 percent of Australian households own or are in the process of purchasing a home. Moreover, many large firms own properties, which are often used to borrow funds for investment. As the value of properties has increased, this has had an impact on the wealth of some households and the amount that firms can borrow. As household wealth and the amount that firms can borrow have increased, household consumption expenditure and firm investment have increased. Use a Keynesian model of the macroeconomy to describe how this increase in consumption and investment would have affected the output in the Australian economy. Be specific and describe what components of expenditure are affected and why.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Real Estate Market, Aggregate Demand Between 2020 and 2022, property prices across Australia have increased by 30% on average. This has affected the wealth of Australian households and firms. Approximately 70 percent of Australian households own or are in the process of purchasing a home. Moreover, many large firms own properties, which are often used to borrow funds for investment. As the value of properties has increased, this has had an impact on the wealth of some households and the amount that firms can borrow. As household wealth and the amount that firms can borrow have increased, household consumption expenditure and firm investment have increased. CO Use a Keynesian model of the macroeconomy to describe how this increase in consumption and investment would have affected the output in the Australian economy. Be specific and describe what components of expenditure are affected and why.
Transcribed Image Text:2. Real Estate Market, Aggregate Demand Between 2020 and 2022, property prices across Australia have increased by 30% on average. This has affected the wealth of Australian households and firms. Approximately 70 percent of Australian households own or are in the process of purchasing a home. Moreover, many large firms own properties, which are often used to borrow funds for investment. As the value of properties has increased, this has had an impact on the wealth of some households and the amount that firms can borrow. As household wealth and the amount that firms can borrow have increased, household consumption expenditure and firm investment have increased. CO Use a Keynesian model of the macroeconomy to describe how this increase in consumption and investment would have affected the output in the Australian economy. Be specific and describe what components of expenditure are affected and why.
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