Question 2 [We learnt in the classes that fiscal and monetary policy measures are mainly implemented to manage short-term economic fluctuations, known as business cycles. We also learnt that policymakers are interested in bolstering the country's economic long-term productive capacity, which contributes towards stronger prosperity and wellbeing.] (a) [A nation's prosperity is strongly dependent on the productive capacity of its economy. What are the main factors (or "ingredients") that determine a country's productive capacity economy? Are there any limitations to these sources of growth and productivity? (100 words) (4 marks) ] Your answer: (b) We know from our lectures that technological progress (innovation, ideas, knowledge breakthroughs) can help overcome barriers to economic growth as discussed in part (a) of this question. Explain the impact of innovation and technological progress on the economy by using any tw_o of the economic models discussed in the classes. For each model, provide a clearly labelled diagram illustrating the effects of an improvement in technological progress and innovation, accompanying by a brief explanation of the diagram (50 words for each of your choice of 2 models). [Hint: The macroeconomic models we have learnt in class include: the AD-AS model, Production Function model, and Business Cycle model] (4 marks)] Your