Question 1 Using the dynamic aggregate demand and aggregate supply model, illustrate and explain the impact of following policy decisions on income, unemployment and inflation in Australia in both short-run and long-run. Part (a) The Commonwealth Government is giving tax cuts and incentives for purchasing electric vehicles. Part (b) Now say, the Reserve Bank of Australia (RBA) is contemplating a suitable policy action to improve the household spending. Explain and illustrate what policy stance should the RBA take and how would that remedy the problem.
Question 1 Using the dynamic aggregate demand and aggregate supply model, illustrate and explain the impact of following policy decisions on income, unemployment and inflation in Australia in both short-run and long-run. Part (a) The Commonwealth Government is giving tax cuts and incentives for purchasing electric vehicles. Part (b) Now say, the Reserve Bank of Australia (RBA) is contemplating a suitable policy action to improve the household spending. Explain and illustrate what policy stance should the RBA take and how would that remedy the problem.
Chapter16: Macro Policy Debate: Active Or Passive?
Section: Chapter Questions
Problem 1.2P
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