Wednesday, February 04, 2009

Unit 2: The slowing Australian economy and the governments reponse

This brilliant clip (and article) from the BBC are jam packed full of economics

http://news.bbc.co.uk/1/hi/world/asia-pacific/7866335.stm video
http://news.bbc.co.uk/1/hi/business/7866303.stm article

a)What is the AD formula?
b) Identify from the clip and article the elements of AD which are decreasing and explain why this is the case
c) What is meant by a government stimulus package and what sort of policy is this that the government is using?
d) What evidence is there of the Australian government using monetary policy as well?
e) Using an AD/AS diagram, discuss the likely success of the latest stimulus package and interest rate cuts in stopping the Australian economy going in to a recesion

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