--%>
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 : Time Value of Money Problems on a Texas

    TVM Appendix B: Using the TI-83/84  Time Value of Money Problems on a Texas Instruments TI-831 Before you start:  To calculate problems on a TI-83, you have to go into the applications menu, the blue  “APPS” key on the calculator. Several

    		•
  • Q : Governments fiscal policy options for

    Normal 0 false false

  • Q : Cyclically adjusted budget Normal 0

    Normal 0 false false

  • Q : Explain Appropriated Revenue

    Appropriated Revenue: The revenue which, as it is earned is reserved and appropriated for a particular aim. An illustration is student fees received by state colleges which are by law appropriated for the support of the colleges. The

    		•
  • Q : Explain Public Service Enterprise Fund

    Public Service Enterprise Funds: For legal base accounting purposes, the fund categorization which identifies funds utilized to account for the transactions of self-supporting enterprises which render goods or services for a direct charge to user (tha

    		•
  • Q : Describe relationship among a bonds

    Describe relationship among a bond's market price and its promised yield to maturity? Describe.A bond's market price based on its yield to maturity (YTM). While a bond has YTM greater than its coupon rate, it sells at discount from its face va

    		•
  • Q : Define Final Budget Summary Final

    Final Budget Summary: A document generated by the Department of Finance subsequent to enactment of the Budget Act that reflects the Budget Act, any vetoes to the language and/or appropriations, technical corrections to the Budget Act, and summing up t

    		•
  • Q : Analysis On Financial Indices On a

    On a weekly basis, starting from week ending on 18/1, you need to produce a weekly performance report of the major indices around the world following this structure:  Currencies a. USD vs Yen, vs GBP(GBP/USD), vs. Swiss Franc (USD/CHF) b. Euro vs USD, Y

    		•
  • Q : How do mergers influence communities

    How do mergers influence communities?While a locally controlled bank is merged into a bank headquartered elsewhere (an out-of-market merger), some of the apprehension regarding the institution's future commitment to the local community is bound

    		•
  • Q : Define Tort Tort : It is a civil wrong,

    Tort: It is a civil wrong, other than a breach of contract, for which the court awards indemnity. The traditional torts comprise malpractice, negligence, assault and battery. Lately, torts have been widely expanded such that the interference with a co

    		•