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.
Click all the ones that apply.
a. A stock market crash reduces people’s wealth.
b. The spread of democracy around the world increases consumer
confidence in Canada.
-Same as options as a.
c. The European economy crashes.
-Same as options as a.
d. Canada enters into an arms race with China, resulting in
a significant increase in military spending.
-Same as options as a.
e. A revolution in Iran results in a significant reduction in
the world’s supply of oil.
-Same as options as a.
f. Terrorist activities temporarily halt the ability of
Canadians to engage in certain productive activities such as
transportation and finance.
-Same as options as a.
g. Intel develops a new computer chip that is faster and cheaper
than previous chips.
-Same as options as a.
h. A summer of perfect weather in the Midwest leads to record
harvests of corn, wheat, and soybeans.
-Same as options as a.