Economic Principles Report: COVID-19 Impact Analysis in Australia

This report analyzes the economic impacts of the COVID-19 pandemic on Australia, utilizing the ADAS (Aggregate Demand-Aggregate Supply) model to assess the effects of vaccination efforts and related policies. It examines the monetary policy responses of the Reserve Bank of Australia (RBA) to the pandemic, focusing on both expansionary and contractionary measures and their potential risks. The report also explores the role of fiscal policy in influencing aggregate demand and national income, highlighting the multiplier effect and its implications for consumption, spending, and investment. The analysis covers the government's strategic approaches to managing vaccine supply and maintaining economic stability, while also considering the potential challenges of controlling inflation and ensuring effective demand-supply management.

Economic Principles

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
Answer 1......................................................................................................................................3
Answer 2......................................................................................................................................4
Answer 3......................................................................................................................................5
Answer 4......................................................................................................................................6
REFERENCES................................................................................................................................7

MAIN BODY
Answer 1
Impacts of Covid-19 impacts on the Australian economic and application of ADAS model
ADAS model is beneficial for determination of total supply and total demands on
economy for particular time of period. Vaccine arrangement is not an easier task and Australia
country implement proper and effective elan to provides vaccination to their people. On the basis
of vaccination higher demands impacts on economy condition.
Australian government decide to provide vaccine on time, and they regulate and import
vaccine from other countries. It influences their economy condition. Starting of pandemic
demand is not higher but after sometime demand is higher and supply of vaccine is reduces so it
impacts on people behaviour as well as impacts on country position (Biondi and et.al., 2021). So
Its clear when demand is higher supply becoming slow, and they analyse that country consider
that they timely and effectively provides services in market but in June people more aware about
vaccination do it directly influences supply.
On the basis of demand increases it influences supply and demand influence prices of product
also influence. So its economic aspect that when market demand is higher and supply is lower so
it generates prices of product is higher so this same situation Australia face when people awarea

bout vaccine and their supply of product is lower, starting conditions is good but after more
people want to generate their attraction towards with the vaccine and their demand will higher on
time. But government can manager their economy conditions with the help of ADAS model it
defines proper framework which time and position can influence performance of and it shows
equilibrium point which clearly shows that market demand , supply, and they achieve their
target, and then they have to improve their supply chain more efficiently and manage country
demands.
Answer 2
ADAS MODEL describe monetary response of the RBA to the pandemic
Product requirement from other are or other place influence performance of RBA they
have to exchange money from other country so it influences performance of Australia GDP.
Government as well as private sectors also impacts by this situationist. Monetary policy
expansion is mainly prepared by for control on money floe in market or economy and it's the
only aspect which managed overall economic growth and government prepares strategies for
control on money flows, and they have authority to manage effective cash and money flow in
market.
Expansionary or constractionary monetary policy
Expasionary monetary policy refers to lose money which means increase in supply of
money in market. It includes to reduce unemployment on the basis of this case study its clear that
government prepares strategic approach to manage vaccine supply in market and build
satisfaction of customer (Schmidt and et,al., 2021). Constractionary monetary policy refers to
manage flow of money and product and good demand supply in manageable cost. So its clear
that second monetary policy scheme is suitable concept which properly manage performance of
economy consideration with stability in prices.
Objective
Consideration of monetary policy will manage multiple aspects effectively, and they have
power and potential to manage flow of money which impacts on produce supply demand,
country GDP rate and economy stability with the perfect prices of vaccine, and perfect decision
about daily this amount of vaccine available in country according they book their vaccine.
Possible risk in this monetary policy

Risk is out of control inflation of demand and supply of product which means people
more attract and aware about vaccination so its directly influence product demand increase so its
impacts on performance of management money flow because government develop strategic plan
about some time unconditional situation and unconsidered demand supply flows impact on
overall economic consideration.
Management of proper and effective flow of demand supply require stability and if
demand is higher than its essential marketers provide properly supply in market with
improvement in production process.
Answer 3
ADAS refers to aggregate demand & aggregate supply model. This model shows the total
demand and supply of the economy. Along with this, it shows the interaction of the demand and
supply at the microeconomic level. Fiscal policy refers to that policy under which the estimation
of the taxes takes place in order to spend on the economy of the country. (Lustig, 2017). Here is
the description of the fiscal policy o the basis of the ADAS model adopted by the Australian
government. Fiscal policy of the government affects the ADAS model through these ways:
 Fiscal policy affects the aggregate demand. It is a demand side policy. The change in
demand is done due to the changing policies of the government. The government spends
on various projects in the economy that affects the demand of the people. On the other
hand the taxation policy of the government also affects the total demand of the economy.
 The fiscal policy also provides an impact on the business expansions such as, net exports,
cost of deb and cost of savings. All of these directly impacts the aggregate demand of the
economy.
 The main motive of the ADAS model is to determine the national income of the country.
The shift in demand and supply of the economy highly impacts the national income of the
nation. Change in the taxation policy of the government impacts the business. High tax
rate results in low profit for the businesses. On the other hand low tax rate results in high
profit for the businesses.
 The business with high profit performs more operation and that results in the contribution
of the GDP. On the other hand, the business with low profit results in the less
contribution towards GDP.

 The fiscal policy plays a major role in shifting the demand curve. Various projects of the
government opens up new opportunities for the economy. As a result, demand by the
people increase.
Answer 4
Multiplier effect of fiscal policy refers to the change in fiscal policy has a multiple effect on the
economy. This policy affects the consumption level, spending level and the investment level of
the economy. (Heinemann, Moessinger and Yeter, 2018). The multiplier effect is that additional
amount affects the level of the income in the economy. The given MPC is 0.9 over the $507
billion people. According to the formula of multiplier uses marginal propensities the change in
the income, consumption and investment of the economy will be 10.
This change will affect the economy aspects of the country as the change in multiplier
effect due to fiscal policy increases with the time. The deduction in the multiplier effect results in
increasing the level of the debt. On the other hand, the increment in this effect leads to gaining of
more income in the economy. The multiplier affects the level of outcome in the economy.
Therefore, the change in the fiscal policy will affect the outcome of the economy. It gets repeated
in the economy. The increment in the multiplier results in the positive effects on the other hand,
the decrement in it, results in the negative effect.

REFERENCES
Books and Journals
Biondi, B., and et.al., 2021. Journal submissions, review and editorial decision patterns during
initial COVID-19 restrictions. Food Policy. p.102167.
Heinemann, F., Moessinger, M.D. and Yeter, M., 2018. Do fiscal rules constrain fiscal policy? A
meta-regression-analysis. European Journal of Political Economy. 51. pp.69-92.
Lustig, N., 2017. Fiscal policy, income redistribution and poverty reduction in low and middle
income countries. Center for global development working paper, (448).
Schmidt, R. A., and et,al., 2021. The early impact of COVID-19 on the incidence, prevalence,
and severity of alcohol use and other drugs: A systematic review. Drug and alcohol
dependence. p.109065.