Assume that Canada is initially in long run equilibrium with price level of P1 and GDP of Y1. Discuss how each of the following four events would affect aggregate demand, the price level and real GDP of Canada, use a graph to explain. There is a sharp fall in Canada’s exchange rateA wave of pro-Canadian sentiment sweeps the U.S. and people in U.S. increase their consumption of Canadian goodsThere is a recession in China, which is a large importer of Canadian agricultural goodsDue to a global health concern, there is a travel restriction of foreign travellers coming to Canada

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Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 14QP

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Assume that Canada is initially in long run equilibrium with price level of P1 and GDP of Y1. Discuss how each of the following four events would affect aggregate demand, the price level and real GDP of Canada, use a graph to explain.

There is a sharp fall in Canada’s exchange rate
A wave of pro-Canadian sentiment sweeps the U.S. and people in U.S. increase their consumption of Canadian goods
There is a recession in China, which is a large importer of Canadian agricultural goods
Due to a global health concern, there is a travel restriction of foreign travellers coming to Canada

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