7.1 Define Monetary Policy and explain its objective on the macroeconomy with reference to the Aggregate Demand - Aggregate Supply (AD-AS) model. Explain the difference between passive and active...

Extracted text: 7.1 Define Monetary Policy and explain its objective on the macroeconomy with reference to the Aggregate Demand - Aggregate Supply (AD-AS) model. Explain the difference between passive and active Monetary Policy with respect to the RBA's policy reaction function. [7 marks] 7.2 Using the AD-AS model and the Phillips Curve, describe the impact of COVID-19 on the Australian economy. By making reference to these minutes, give reasons to justify your answer with respect to the components of GDP. [7 marks] 7.3 Explain how the RBA's decision on Monetary Policy at this meeting will help to cushion the economic impacts of COVID-19. Give reasons with reference to the AD-AS and Phillips Curve models and the transmission mechanisms of Monetary Policy. [6 marks] Clearly explain each of your answers in the text box below.