Macro Economics - Canadian economy

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Macro Economics - Canadian economy Powered By Docstoc
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                 [MACRO ECONOMICS -
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                 CANADIAN ECONOMY]

Document Description:
It briefly explains how changes take place in aggregate demand and aggregete supply
when there will be a change in dollar value of Canada, decrease in world oil price and
change in business plan.
                Sub: Economics



              Question:
              The Canadian economy is in long-run equilibrium. Assume the following events occur one at a
              time. Show the effect of each event on Aggregate Demand and Short-run Aggregate Supply in
              Canada by shifting only one curve. Potential GDP does not change. Label the change in
              equilibrium price P2 and output Y2 and equilibrium E2.

              In your assignment use this graph format for each impact.




              IMPACTS: (Draw new graph for each)

                   A. The value of the Can $ declines.
                   B. World oil prices decrease.
                   C. Canadian businesses plan to increase inventories.


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              Solution:
              A) The value of Canadian dollar declines:

              When the value of Canadian dollar declines relative to a foreign currency, Canadian goods and
              services become relatively cheaper compared to foreign goods and s
				
DOCUMENT INFO
Description: It briefly explains how changes take place in aggregate demand and aggregete supply when there will be a change in dollar value of Canada, decrease in world oil price and change in business plan
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