International collaboration and globalization Your Policy Brief needs to consider the ways that the Australian economy is part of the Asian-Pacific region and connected to the rest of the world. Your team is analysing the ways that countries interact with each other for the purpose of elevating economic prosperity and overall wellbeing. Explain what is meant by the term globalisation, and what is the link between globalisation and wellbeing? (2-3 sentences) As the world continues to recover from the COVID-19 pandemic, give some examples of the ways that international collaboration and co-operation have been important for the global recovery? In what ways has international collaboration been under threat during the pandemic, and what policy arrangements and institutional settings can help to ensure that countries continue to co-operate with each other in the future? (2-3 sentences) The Australian Trade and Investment Commission (Austrade) reports on Australia’s trade patterns with the rest of the world, as illustrated in the map below. In its 2021 Benchmark Report, Austrade noted that “12 of Australia’s top 15 export markets are in the Asian region. China remained Australia’s largest trading partner in 2020, accounting for around 31% of total two-way trade. Japan and Korea continue to be important trade partners, representing around 13% of total trade.” 4. Imagine that your economist colleagues working at the Bank of England have contacted you to ask for your economic expertise and advice. After the economic shock of pandemic, the UK economy has been experiencing another set of economic challenges: shortages in fuel leading to higher fuel prices; shortages in transport workers due to the consequences of Brexit; and large disruptions to supply chains that are preventing the transportation of many essential products. The Financial Times recently reported that “Britain’s cost of living crisis is showing no sign of easing after new data showed UK inflation stuck above 10 per cent in March.” (Source: Financial Times, 10 April 2023, ‘Double-digit UK inflation offers little hope for end to cost of living crisis https://www.ft.com/content/2fb6f361-a7bb-4b98-8100-6847b5df79b4) Australia has recently signed on to a new trade deal with the UK, and the UK is one of the largest sources of foreign investment for the Australian economy. This means it is in Australia’s interest for the UK economy to restablise. To help guide your analysis and policy response, visually illustrate the impact of these supply-side shocks on the UK economy using an AD-AS diagram. Your colleague has made a start on the diagram (see next page) but is missing a lot of labels and essential information. For simplicity, assume that the UK economy was initially at Y*. The Bank of England is trying to figure out the most appropriate monetary policy response in this situation. Faced with these negative supply-side economic shocks, what ‘doubly problematic’ macroeconomic concern do you need to alert them to? (1-2 sentences) Your colleagues at the Bank of England inform you that they are concerned about unemployment, but even more concerned about inflation. Based on this information, what monetary policy prescription would you recommend? (2-3 sentences) Building on the diagram that you have already drawn showing the impact of the supply-side shock, now illustrate (on the same diagram) what would happen to the UK economy if the Bank of England adopts your policy advice. Use the bullet points to explain each step. Be sure to show the final effect on Output and Price Level, relative to your starting equilibrium. Figure 2: Illustration of the economic shock on the UK economy and your policy recommendation for the Bank of England’s monetary policy response  Use these bullet points to firstly explain the shock being experienced by the UK economy, followed by an explanation of your monetary policy advice to the Bank of England. Be sure to refer to every element on your AD-AS diagram: