Suppose, initially the Australian economy is atfull employment(in other words the economy is atthe potential GDP). Using AD-AS model, explain how would each of the following events aectthe economy both in the immediate and in the long term. a) A slowdown in China’s economic growth due to the sub-prime crisis in the US. b) Union wage settlements push the wage rate up. c) An increase in consumer confidence.

Suppose, initially the Australian economy is atfull employment(in other words the economy is atthe potential GDP). Using AD-AS model, explain how would each of the following events aectthe economy both in the immediate and in the long term. a) A slowdown in China’s economic growth due to the sub-prime crisis in the US. b) Union wage settlements push the wage rate up. c) An increase in consumer confidence.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 9E

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