Growth prospects for SA's trading partners, such as Europe, are slowly picking up momentum and improved Eurozone growth could benefit SA's economy

Use the AS_AD model to explain and illustrate the short-run and long-run impacts of supply adjustment on the aggregate price level and level of national income of South Africa owing to improves economic growth in the Eurozone. In your answer, use the Keynesian Transmission Mechanism's chain reactions (PE, SE, NE) to show the impact of the improved economic growth followed by supply adjustment on South Africa's income levels (Y), the aggregate price level (P) and the interest rate (r)

 

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Answer The ASAD model along with the Keynesian Transmission Mechanism can be used to analyze the shortrun and longrun impacts of supply adjustment on the aggregate price level and level of national in... View the full answer