Assume that the US macroeconomic equilibrium is equal to the potential GDP.

AD-AS Diagram
a)Â Â Â Â Assume that the US macroeconomic equilibrium is equal to the potential GDP.

Americans are becoming more cautious with their household spending due to the uncertainty of the presidency of Donald Trump. Using AD-AS model, explain carefully the immediate and long term effects of the event towards the economy. Draw the appropriate AD-AS diagram to support your explanation.

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b)Â Â Â Watch the video available at the following link, and write a brief description of the event described in the video.

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Assume that prior to the event the Australian economy’s macroeconomic equilibrium was equal to the potential GDP. Using AD-AS model, explain carefully the immediate and long term effects of the event for the Australian economy. Draw the appropriate AD-AS diagram to support your explanation.

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