The effect of the COVID-19 Pandemic in Australia. Australian authorities faced significant health and economic policy challenges during the COVID- 19 Pandemic, shutting down certain industries to protect public health. This shutdown resulted in almost 1 million jobs lost in April and May 2020, and a dramatic fall in consumers and firms confidence to spend and invest. Describe the effect that a fall in confidence had upon output in the Australian economy using a Keynesian model of the macroeconomy. a. the components of expenditure that are affected and why; b. the adjustment process associated with moving from an initial equilibrium (before the onset of the pandemic) to a new equilibrium (after the significant job losses), i.e. the mechanism that leads to a change in output (including a relevant diagram); c. an explanation of what the multiplier is and its role in explaining the fall in output; and d. a discussion of the policy actions that can restore aggregate demand to its initial level..

1. The effect of the COVID-19 Pandemic in Australia.
Australian authorities faced significant health and economic policy challenges during the
COVID- 19 Pandemic, shutting down certain industries to protect public health. This shutdown
resulted in almost 1 million jobs lost in April and May 2020, and a dramatic fall in consumers
and firms confidence to spend and invest.
Describe the effect that a fall in confidence had upon output in the Australian economy using a
Keynesian model of the macroeconomy.
a. the components of expenditure that are affected and why;
b. the adjustment process associated with moving from an initial equilibrium (before the onset of
the pandemic) to a new equilibrium (after the significant job losses), i.e. the mechanism that
leads to a change in output (including a relevant diagram);
c. an explanation of what the multiplier is and its role in explaining the fall in output; and
d. a discussion of the policy actions that can restore aggregate demand to its initial level.