Explain the trends and relationships between Inflation, Unemployment and Real GDP growth using a Business Cycle. (ii).

(i).   Explain the trends and relationships between Inflation, Unemployment and Real GDP growth using a Business Cycle.                                                                                                                                                          

(ii). “The Australian government is considering measures to grant significant tax rebates to big entrepreneurs/Companies that are spending big dollars on Research & Development (R&D)”.        Analyse the possible impact of this measure on the Australian GDP. Use a suitable diagram/model framework (preferably AD – AS model) to explain your answer.                                                                                                                                                                                                                                                                                                                                   

(iii).  Suppose that the government is proposing to spend 5 billion in the next budget to improve and extend the national broadband network including a better mobile phone coverage to regional          Australia. Explain the short-run and long-run impact of this proposal on the economy using the AD-AS model framework.                    [4 marks]

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