, 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.
To address this question, we will break it down into several
steps. The core concept centers around temporary demand
shocks and their effect on the South African economy using the
AD-AS (Aggregate Demand - Aggregate Supply) model. The
question also asks for a graphical illustration and an explanation
of how prices, output, and employment were affected by such
shocks, particularly in the context of the COVID-19 outbreak.
Step 1: Introduction to the AD-AS Model
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.
To address this question, we will break it down into several
steps. The core concept centers around temporary demand
shocks and their effect on the South African economy using the
AD-AS (Aggregate Demand - Aggregate Supply) model. The
question also asks for a graphical illustration and an explanation
of how prices, output, and employment were affected by such
shocks, particularly in the context of the COVID-19 outbreak.
Step 1: Introduction to the AD-AS Model
