--%>
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 : What is Workload Budget Adjustment

    Workload Budget Adjustment: Any adjustment to the presently authorized budget obligatory to maintain the level of service needed to fund a Workload Budget, as stated in the Government Code Section 13308.05. A workload budget adjustment is as well term

    		•
  • Q : What are Exempts Exempts : The state

    Exempts: The state employees exempt from civil service pursuant to the subdivision (e), (f), or (g) of Section 4 of Article VII of the California Constitution. Illustrations comprise department directors and some other gubernatorial appointees.

    		•
  • Q : Describe factors which common

    Describe some factors which common stockholders consider while deciding how much, if any, cash dividends they want from the corporation wherein they have invested? Common stockholders would assume the company's investment opportunity, their requ

    		•
  • Q : Describe capital rationing Describe

    Describe capital rationing? Should a firm practice capital rationing? Why? Capital rationing is the practice of setting dollar restriction on what will be invested in new capital budgeting projects. Proprietorships, partnerships and private c

    		•
  • Q : Chartered banks Normal 0 false false

    Normal 0 false false

  • Q : Free-rider problem Normal 0 false false

    Normal 0 false false

    		•
  • Q : Sensitivity analysis report ABC Company

    ABC Company manufactures three types of products and has provided you with the following linear problem: Max Z=15X1+20X2+14X3 (Total profit)s.t.5X1+6X2+4X3<=210 (Total labor hours available)10X1+8X2+5X3<=200

    		•
  • Q : Describe depreciation expense Describe

    Describe depreciation expense as it seems on the income statement.  Accounting depreciation is the allocation of asset's primary cost over time. Depreciation cost on an income statement is the amount of the asset=s initial cost allocated to

    		•
  • Q : Semiannua compounding It is now January

    It is now January 1. You plan to make a total of 5 deposits of $600 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 14% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. How much will be in your account

    		•
  • Q : Explain Appropriation Appropriation :

    Appropriation: The authorization for a particular agency to make expenditures or make obligations from a particular fund for a particular purpose. It is generally limited in amount and period of time during which the expenses is to be

    		•