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What is the result of aggregate demand

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A) In 2013, the Australian economy experienced a mining boom. During the mining boom period, what effect does a change in expectations by households and firms would have had on the aggregate demand curve?

B) In the dynamic aggregate demand and aggregate supply model, what is the result of aggregate demand increasing faster than potential GDP?

C) Given the situation in part (b), if the Reserve Bank of Australia wants to move real GDP to its potential, should it use expansionary policy or contractionary policy? In your answer, make sure you explain whether the RBA should be increasing or decreasing the cash rate?

Reference no: EM132909147

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