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.

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter16: Macro Policy Debate: Active Or Passive?
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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.
Transcribed Image Text: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.
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