Answer Happy

For each of the following situations, use an AD/AS model to describe what happens to price levels and output in Canada in the short run. In each case, assume the economy starts in long- and short-run equilibrium, and describe the appropriate shifts in the AS or AD curves. Instructions: You may select more than one answer. Click the box with a check mark for correct answers, and click to empty the box for the wrong answers. a. A stock market crash reduces people's wealth. Aggregate demand shifts to the left Aggregate demand shifts to the right ? Aggregate supply shifts to the left ? Aggregate supply shifts to the right Output falls Output rises ?The price level rises ? The price level falls b. The spread of democracy around the world increases consumer confidence in Canada. ? Aggregate demand shifts to the left ? Aggregate demand shifts to the right Aggregate supply shifts to the left Aggregate supply shifts to the right Output falls ? Output rises The price level rises The price level falls
c. The European economy crashes. ? Aggregate demand shifts to the left ? Aggregate demand shifts to the right ? Aggregate supply shifts to the right ? Aggregate supply shifts to the left Output falls Output rises ? The price level falls ? The price level rises d. Canada enters into an arms race with China, resulting in a significant increase in military spending. ? Aggregate demand shifts to the left ?Aggregate demand shifts to the right ? Aggregate supply shifts to the right ? Aggregate supply shifts to the left ? Output falls ? Output rises The price level falls ? The price level rises e. A revolution in Iran results in a significant reduction in the world's supply of oil.
f. Terrorist activities temporarily halt the ability of Canadians to engage in certain productive activities such as transportation and finance. ? Aggregate demand shifts to the right ? Aggregate demand shifts to the left ? Aggregate supply shifts to the right ? Aggregate supply shifts to the left ? Output falls ? Output rises ? The price level rises ? The price level falls g. Intel develops a new computer chip that is faster and cheaper than previous chips. ?Aggregate demand shifts to the right Aggregate demand s to the left ?Aggregate supply shifts to the right ?Aggregate supply shifts to the left ? Output falls ? Output rises ? The price level rises ? The price level falls h. A summer of perfect weather in the Midwest leads to record harvests of corn, wheat, and soybeans.