Overview
Examine the macroeconomic factors influencing the overall health of an economy:
a) Describe the components of aggregate demand (AD) and aggregate supply (AS) in the context of a closed economy. b) Using the AD-AS model, illustrate and explain the short-run and long-run effects of an increase in government spending. c) Discuss how the Phillips Curve relates to the trade-off between inflation and unemployment and its implications for monetary policy.
Ensure that your answers are supported with economic theories, graphs, and real-world examples.