, 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 answer this question, we'll break it down into parts: first, a
brief overview of the Aggregate Demand-Aggregate Supply
(AD-AS) model, followed by the illustration and explanation of
how temporary demand shocks during the COVID-19 pandemic
affected prices, output, and employment in South Africa,
assuming no government intervention or monetary policy
response.