Question

L05e-ADAS model QUESTION5 10 MARKS For each of the following three (3) situations below, using a separate AD/AS diagram for each situation: 1) Show the effect on a diagram- 1 or 2 marks. 2) Describe the impact ie. explain the diagram-GDP &GPL-1 mark. 3) Explain your reasoning (where appropriate you must use the AD formula in your explanation)-1 mark. As a starting point have AD intersect AS in the Keynesian range. Ceteris paribus applies to each situation (1 mark deducted if starting point is wrong) Read the following passage and then answer the questions that follow. Economic rumble set to ripple out from quake-shattered Canterbury Statements have been made this week-considered iresponsible by many economists- that Canterbury's l be good for the economy. This is based on the assumption that 'a rebound in retail spending to replace lost material will possessions will occur. Economist Paul D substantial amount of wealth. We have lost our physical capital. On a national level there is a negative impact and at local level an intensely negative impact. Economist Shamubeel Eaqub says 'up to 30 percent of small businesses may fail following a natural disaster DominionPost (11 September, 2010). BusinessDay B7 alziel gets straight to the point: The first thing to say is we have lost a Answer the following questions a) The claim has been made that the ear for the economy. For the short-term only, show, describe and explain why this might be so. 3 marks) el disagrees with the assessment that the earthquake will be good for the economy. For the short-term only, show, describe and explain why Daiziel considers the earthquake b) Daizi an economic setback The earthquake will result in considerable capital in and long term impacts nd iain both the shor tem c) term 4 marks) Note: You will lbse 1-mark if you do not start on the Keynesian range of the AD curve. Remember to descnbe and explain. No marks will be awarded for diagrams unless both description and each diagram not labelled correctly, a maximum of 1-mark wil be deducted prapery label all diagrams, and to show are provided and at least one is

Could you please help me to answer these questions with clear writing or typing! Thank you very much!

Answer 1

a) the claim that has been made that the earthquake will be good for the economy is in the context that, in earthquake a lots of physical capital is lost but as those capital are necessery for the economy investment will be made on various projects to restore them.and as we know investment in an economy creates employment as well as output it will be helpfull for the economy to grow.

b)dalziel disagrees with the assessment because the physical as well as the human capital loss of the economy is way more for the economy than what it might gain from the earthquake and it is quite irrational to say earthquake is good because already installed capacity of the economy gets hurt quite immensly and also manpower loss can not be replaced again.

c) the earthquake will definitly result in considerable investment in capital and will put a lots of presure on the economy in the shortrun . if the nessery goods industry gets harm immensly by earthquake then it will be really difficult for the economy to adjust in the shortrun.in the longrun the impacts will be neutralise as it will create new capital and employment as well.