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Analyze the short-run effects on the Canadian economy of each of the following events using aggregate expenditure (AE) and aggregate demand and...
Analyze the short-run effects on the Canadian economy of each of the following events using aggregate expenditure (AE) and aggregate demand and supply (AD-AS) diagrams. In each case, identify the cause of any shift or movement along AE, AD, and/or AS and note the effect on national income (Y) and the price level (P). [Hint: See Fig 23-8.]
(a) A change in tastes leads Canadian consumers to transfer their video spending from domestic cable TV services to domestic video streaming services.
(b) In response to the tax reform package recently passed in the US, the Canadian government reduces domestic tax rates.
(c) As a result of the collapse of the NAFTA renegotiation, Canadian exports are reduced.
(d) An increase in wages leads to an increase in unit costs for Canadian producers.
(e) As a result of rapid technological change in renewable energy production the price of energy decreases leading to a decrease in unit costs for all Canadian producers and a decrease in the dollar value of Canadian oil exports.
