1. The aggregate supply curve shifts to the right because a retardation in wages leads to a decrease in hail of turnout which consequently increases the total supply as firms ar able to produce in a larger measuring rod since they are able to allocate more money for the production of goods and services. This brings to the fall in general scathe level as the grade of the persistent rise in general price level slows down and eases inflationary pressures accordingly. The interest rates detain low as the rate of inflation is low.
2. The reduction in inflationary expectations would be a major factor in the decline of wages growth because the income earners or wage earners would not demand for higher wages as they expect the rate of inflation would be lower in the future so they can still afford their living expenses without demanding for higher wages.
3. The boilersuit competitiveness of Australia would drop if the decline in the insular heavens was greater than that of the earthly concern sector because private sector is affected by self-interest, private initiative and lolly motive thus private sector would introduce a greater alteration and volume of products in order to attract consumers to purchase their products.
The profit motive acts as a powerful incentive for private sector to undertake research and development as fountainhead as innovation to increase efficiency in production. The humankind of private sector would be a threat to the public sector because consumers will direct their expenditure to the goods and services provided by the private sector for the fact that private sector provides cleanse prime(a) of goods and services. Therefore, the public sector would have to improve the quality of goods and services in order to remain in the market. Hence, a greater decline in the private sector...
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