ECS3709 Assignment 3 (COMPLETE ANSWERS) Semester 2 2024 - DUE September 2024

ECS3709 Assignment 3 (COMPLETE ANSWERS) Semester 2 2024 - DUE September 2024 ; 100% TRUSTED Complete, trusted solutions and explanations...Read the South African Reserve Bank Working Paper, “Identifying Supply and Demand Shocks in the South African Economy, 1960–2020’’, which is written by Johannes W. Fedderke. The link to this Working Paper is: After reading the Working Paper, attempt the following questions: QUESTION 1 [Marks: 15] According to Fedderke (2021), “supply shocks have declined in magnitude and amplitude since the 1990s, while demand shocks remain relatively prominent.” Using the AD-AS model, illustrate graphically and explain how the temporary demand shocks, experienced during the COVID-19 outbreak, affected the level of prices, output, and employment in South Africa. Assume that there is no government intervention and no monetary policy response to restore the economy to its initial equilibrium. QUESTION 2 [Marks: 5] Based on the Working Paper by Fedderke (2021), discuss any five limitations of the Blanchard and Quah (BQ) identification strategy, which affect its theoretical coherence in analysing the demand and supply shocks in South Africa.