Solve all subparts use the concept of macroeconomics and illustrate Australian authorities faced significant health and economic policy challenges during the COVID19 Pandemic, shutting down certain industries to protect public health. This shutdown resulted in almost 1 million jobs lost in April and May 2020, and a dramatic fall in consumers’ and firms’ confidence to spend and invest. Describe the effect that a fall in confidence had upon output in the Australian economy using a Keynesian model of the macroeconomy. Ensure that your analysis includes the following: (i) the components of expenditure that are affected and why; (ii) the adjustment process associated with moving from an initial equilibrium (before the onset of the pandemic) to a new equilibrium (after the significant job losses), i.e. the mechanism that leads to a change in output (including a relevant diagram); (iii) an explanation of what the multiplier is and its role in explaining the fall in output; and (iv) a discussion of the policy actions that can restore aggregate demand to its initial level.
Solve all subparts use the concept of
Australian authorities faced significant
(i) the components of expenditure that are affected and why;
(ii) the adjustment process associated with moving from an initial equilibrium (before the onset of the pandemic) to a new equilibrium (after the significant job losses), i.e. the mechanism that leads to a change in output (including a relevant diagram);
(iii) an explanation of what the multiplier is and its role in explaining the fall in output; and
(iv) a discussion of the policy actions that can restore aggregate demand to its initial level.
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