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ECS3709 Assignment 3 Semester 2 2024

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ECS3709 Assignment 3 Semester 2 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... Read the South African Reserve Bank Working Paper, “Identifying Supply and Demand Shocks in the South A...

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  • September 13, 2024
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ECS3709
ASSIGNMENT 3 SEMESTER 2 2024
UNIQUE NO.
DUE DATE: SEPTEMBER 2024

, ECS3709

Assignment 3 Semester 2 2024

Unique Number:

Due Date: September 2024

Applied Macroeconomics

Question 1

1. The AD-AS Model Overview

The AD-AS model is used to analyze macroeconomic conditions and how they are
affected by changes in aggregate demand (AD) and aggregate supply (AS). In this
context:

 Aggregate Demand (AD) represents the total demand for goods and services in
an economy.
 Aggregate Supply (AS) represents the total output of goods and services
produced by the economy at different price levels.

2. Temporary Demand Shock During COVID-19

The COVID-19 outbreak caused a sudden and significant reduction in demand due to
lockdowns, restrictions on businesses, and reduced consumer and investment
spending. This situation represents a negative demand shock. Since we assume no
government intervention or monetary policy response, the economy will have to adjust
naturally to the demand shock.

3. Graphical Illustration: AD-AS Model

 The initial equilibrium is at the intersection of the AD curve and the short-run
aggregate supply (SRAS) curve, where the economy is producing at the full-
employment output level Y0Y_0Y0 and the price level is P0P_0P0.

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