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Homework CH20a: AD-AS You will see four scenarios listed below. For each of these scenarios you need to draw the AD-AS diagram and show your analysis. Scenarios: 1. Government decides to expand the investment tax credit. 2. Canada suffers from an economic recession 3. There is a sudden decrease in oil price 4. People are worried that the social security system might go bankrupt. They increase their saving Assignment Requirements To be successful with this homework, you will need to complete the following steps for each of the four scenarios listed 1. Draw the AD-AS diagram, Label everything clearly. Find the initial equilibrium and mark it as Point A 2. Show the short-run effect: Find which curve shifts in which direction. Draw in the new curve, label it, and draw in an arrow that indicates the shift Write "S" above the arrow to indicate the short-run effect. 3. Find the short-run equilibrium and mark it Point B 4. Respond to: What happens to the price level (output, and (i) unemployment rate in the short run? 5. One of the curves will shift as we reach the long run equilibrium. Draw in the shift, mark the direction of the shift with an arrow. Write "LR" above the arrow to indicate the long-run shift. 6. Find the long-run equilibrium and mark it Point C 7. Respond to: What happens to the price level (output, and (ii) unemployment rate in the long-run (compare to the initial equilibrium)? Submitting Your Assignment All work must be your own. Copying other people's work or from the Internet is a form of plagiarism and will be prosecuted as such You will need to create and submit a document as an attachment using the Canvas Assignment tool. Your file must show your analysis. It can be a PDF file, a Word dock file, or other image files. You may draw with your computer program (MS Word, Power Point, or other programs that have easy drawing tools). You can also draw your work on paper and scan the page to create your file. Another option would be to simply take a photo of the page you create. This would not be the recommended choice, but if you do choose to take a photo, make certain that all of your analysis and all of the diagrams are shown clearly in the photo. Be sure to include your name in the text of the document and in the name of the document (ie. lastname homeworkCH20.docx, or pdf, etc). You can only submit once, so make sure you are completely finished before submitting and that you attach the correct file. • Submissions sent by email will NOT be accepted.