2. Real Estate Market, Aggregate Demand (3 marks). Between 2020 and 2022, property prices across Australia have increase

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2 Real Estate Market Aggregate Demand 3 Marks Between 2020 And 2022 Property Prices Across Australia Have Increase 1 (385.41 KiB) Viewed 37 times

2. Real Estate Market, Aggregate Demand (3 marks). Between 2020 and 2022, property prices across Australia have increased by 30% on average. This has affected the wealth of Australian households and firms. Approximately 70 percent of Australian households own or are in the process of purchasing a home. Moreover, many large firms own properties, which are often used to borrow funds for investment. As the value of properties has increased, this has had an impact on the wealth of some households and the amount that firms can borrow. As household wealth and the amount that firms can borrow have increased, household consumption expenditure and firm investment have increased. Use a Keynesian model of the macroeconomy to describe how this increase in consumption and investment would have affected the output in the Australian economy. Be specific and describe what components of expenditure are affected and why.