Gross Domestic Product, business cycle, unemployment, inflation, aggregate demand – aggregate supply model and government policies.
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3. Summarise the fiscal response of Australian government to COVID 19 and use AD-AS model to illustrate the fiscal policy responses of Australian government and describe the objective the fiscal policy.
4. Assuming the marginal propensity to consume is 0.8, calculate the multiplier effect of the fiscal policy response package of $194 billion. Do you think the realised policy effect will be as big as that you calculated? Elaborate your answers.