## Analysis of the AD-AS Diagram for Canada### Graph Description:The graph presented is an Aggregate Demand-Aggregate Supply (AD-AS) diagram for Canada, displaying the relationship between the price level and real GDP.- **AD (Aggregate Demand) Curve**: This is the downward-sloping blue line. It indicates that as the price level decreases, the quantity of real GDP demanded increases.- **SRAS (Short-Run Aggregate Supply) Curve**: The upward-sloping red line represents the short-run aggregate supply, showing that as the price level increases, the quantity of real GDP supplied also increases.- **LRAS (Long-Run Aggregate Supply) Curve**: The vertical black line, labeled LRAS, symbolizes the long-run supply in the economy. It is vertical because, in the long run, the economy's output is determined by factors of production and is not influenced by the price level.### Fiscal Policy Question:The diagram poses a question regarding the appropriate fiscal policy to be adopted by the Canadian government to restore long-run equilibrium.#### Fiscal Policy Options:a. There is no need for either contractionary or expansionary fiscal policy.b. The government should implement expansionary fiscal policy.c. The government should implement contractionary fiscal policy.This instructional content engages students in understanding macroeconomic policy decisions based on the equilibrium portrayed in the AD-AS model.

The point at which aggregate demand and aggregate supply intersects is the point at which the actual…

2. The graph below shows the AD-AS diagram for Canada. 1200+ 1100+ 1000 AD 900 800 - 700+ 600 + 50KRAS 400 300- 200 - 100+ TRAS 100 200 30Q 400500 600 700 800 9001000I 100 20 Real GDP What type of fiscal policy should the government of Canada be implementing to economy to the long-run equilibrium (select one)? a. There is no need for either contractionary or expansionary fiscal policy. b. The government should implement expansionary fiscal policy. c. The government should implement contractionary fiscal policy. Price Level

2. The graph below shows the AD-AS diagram for Canada. 1200+ 1100+ 1000 AD 900 800 - 700+ 600 + 50KRAS 400 300- 200 - 100+ TRAS 100 200 30Q 400500 600 700 800 9001000I 100 20 Real GDP What type of fiscal policy should the government of Canada be implementing to economy to the long-run equilibrium (select one)? a. There is no need for either contractionary or expansionary fiscal policy. b. The government should implement expansionary fiscal policy. c. The government should implement contractionary fiscal policy. Price Level

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap - inflationary or recessionary - will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output? How would your recommended fiscal policy shift the aggregate demandcurve? (Note: you do not need to draw anything).(a) A stock market boom increases the value of stocks held by households.(b) Firms come to believe that a recession in the near future is likely.(c) Anticipating the possibility of war, the government increases its purchases of military equipment.(d) The quantity of money in the economy declines and interest rates increase.
01. Which ff the following reasons why fine-tuning the economy is not likely to be successful, is not really a problem for fiscal policy? O (a) Recognition lag (b) Policy lag O (c) Implementation lag (d) Impact lag (0) Both (a) and (b)
Assume that the economy experiences very high increasing energy prices. 1. Explain about what counter cyclical fiscal policy should be used. (Use the macroeconomic approach and include diagram)
With the following images, explain what is meant by a cyclical deficit
Question 4 Using AD\ AS model, show how the fiscal policy work in case of recession.
Always use economic terms, diagrams. "Counter-cyclical fiscal policy works. If consumers and businesses lose confidence because of the changing world, the government can fix this economic problem - that is what the Biden $1.9 trillion stimulus was all about. Sure, there might be some issues with the deficit, but given a recovery, the government can pay that deficit off. Also, since we are in a very inflationary period again we might expect counter-cyclical fiscal policy to resolve some of the debt issues." Please explain this comment. (Hint: don't forget to use an AS AD diagram and possibly a business cycle diagram).
1-D please.
21.
8
explain the effect of the crisis 2007-2009 on USA government's budget in long run?
The Canadian federal budget moved from a surplus of 9.6billioninthe2007-2008 fiscalyeartoade ficitof5.8 billion the next year, and a large deficit of S55.6 billion in 2009-2010. a. Suppose real GDP was at potential in each of the first two years. What can you conclude about the cause of the change in the budget deficit? Show this change in a diagram of the budget deficit function. b. Suppose from 2008-2009 to 2009-2010, two things happened: real GDP fell and the government implemented an expansionary fiscal policy (both of which were true). Show these two separate events in a diagram of the budget deficit function.
Find the size of the cyclically adjusted budget deficit. Find the initial equilibrium for prices (P) and income (Y). Find the actual budget deficit for the equilibrium value of Y. Then illustrate on both diagrams and explain what happens when the Alberta government cuts expenditures to eliminate its Budget deficit