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Draw and label the diagram of the macroeconomy in Australia

Draw and label the diagram of the macroeconomy in Australia

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Answer #1

The Australian macroeconomic model, also known as the SWAN diagram represents the Australian economy under a fixed exchange system regime. The diagram looks something like this.

When there is a Balance of Payments disequilibrium, either due to market forces or policy measures, the SWAN model comes to the rescue. Internal balance tries to ensure full employment at the least inflation, whereas external balance tries for a "No surplus - No deficit" situation in the economy.

Hope this helps. Cheers!

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