a. What does Stephen Harper mean by “not so positive” and how would Canada be affected by a global recession?
b. Illustrate the effects on Canada’s short-run macroeconomic equilibrium.
Prime Minister Stephen Harper emerged from a meeting with Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney in Ottawa saying the world economic picture is “not so positive.” The fear is that a failure to contain the European debt crisis will push a weak global economy into a recession. Harper and British Prime Minister David Cameron ended their meeting in Ottawa with a call for European leaders to take decisive action to avoid a second downturn and warned that governments must commit to cutting their debts and deficits and to resisting protectionism.