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Suppose, initially the Australian economy is at full employment (in other words the economy is at...

Suppose, initially the Australian economy is at full employment (in other words the economy is at the potential GDP). Using AD-AS model, explain how would each of the following events affect the 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.

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Rahul Sunny answered 1 year ago
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