--%>
Assignment Help - homework help

Influence the economy in short run and long run

Illustrate how each of the following would influence the economy first in the short run & then in the long run. Suppose that Canada is primarily operating at its full employment level of output, which prices and wages are finally flexible upward and downward both, and that there is no counteracting fiscal or monetary policy.

a. Due to a war abroad, the oil supply to Canada is disrupted, sending oil prices rocketing upward.

b. Construction spending on new homes increase dramatically, greatly raising total Canadian investment spending.

c. Economic recession take place abroad, significantly decreasing foreign purchases of Canadian exports.

E

Expert

Verified

(a) Short run: The aggregate supply curve shifts towards the left, the price level increase, and real output declines. Long run: The aggregate supply curve shifts back rightward (because declining nominal wages), the price level drop, and real output raise.

(b) Short run: The aggregate demand curve shifts towards the right, and the price level and real output both enhance. Long run: The aggregate supply curve shifts towards the left (because of higher nominal wages), the price level increase, and real output declines.

(c) Short run: The aggregate demand curve shifts towards the left, the price level and real output both decline. Long run: The aggregate supply curve shifts towards the right, the price level drop further, and real output raise.

   Related Questions in Finance Basics

  • Q : Compare diversifiable and non

    Compare diversifiable and non diversifiable risk. Which do you think is more significant to financial managers within a business firms?Diversifiable risk can be dealt along with by, of course, diversifying. Generally non diversifiable risk is co

    		•
  • Q : Describe compensating balances its need

    Describe compensating balances and why do banks needs them from some customers? Under what situation would banks be most likely to impose compensating balances? Compensating balances are funds that a bank needs a customer to maintain in a non-i

    		•
  • Q : How is finance associated to accounting

    How is finance associated to the disciplines of accounting and economics? Financial management is basically a combination of accounting and economics. Firstly, financial managers employ accounting information such

    		•
  • Q : Explain Financial Models Financial

    Financial Models: A model which symbolizes the financial statements or financial operations of a company in terms of its business parameters and forecasts future financial performance. Models are employed for risk management by examining various econo

    		•
  • Q : Technological improvement of production

    Normal 0 false false

    		•
  • Q : Define May Revision May Revision : The

    May Revision: The annual update to the Governor’s Budget having a revised estimate of General Fund revenues for the present and ensuing fiscal years, any proposals to adjust expenditures to reflect the updated revenue estimates,

    		•
  • Q : Describe Form 9 Form 9 : It is the

    Form 9: It is the request by department for space planning services (example, new or extra space lease extensions, or renewals in non-institutional) and also evaluated by the Department of Finance.

    		•
  • Q : Define Executive Branch Executive

    Executive Branch: One of the three branches of state government, accountable for administering and implementing the state's laws and programs. The Governor's Office and those individuals, departments, and offices reporting to it (that

    		•
  • Q : Private closed economy based question

    Normal 0 false false

    		•
  • Q : Describe the primary variables in EOQ

    Describe the primary variables being balanced in the EOQ inventory model? Clarify In the EOQ model the primary variables being balanced are carrying costs and ordering costs. The more frequent orders are placed the lower the firm's carrying co

    		•