Assignment 2-10: Aggregate Supply / Demand

Draw a separate diagram for each of the following questions. Begin each solution by drawing both an AD and

AS curve to illustrate the equilibrium condition. For each of the questions draw a new curve (either demand or

supply or both!) that illustrates the new shift in the appropriate way. Some questions are tricky, so ensure

that you have the factors that cause . . . . Be sure to label your diagram thoroughly showing the effects on

equilibrium price level and GDP.

a. The impact of a decline in the discount lending rate by the Bank of Canada.

(1 mark)

AD ___

AS ___

PL ___

GDP ___

b. The efficiency with which the Canadian economys existing productive

resources could be utilized is decreased by 20%. (1 mark)

AD ___

AS ___

PL ___

GDP ___

c. Show what will happen in the Canadian Economy if the U.S. dollar

depreciates. (1 mark)

AD ___

AS ___

PL ___

GDP ___

d. The Canadian economy has 30% more of all productive resources, which

could be used at the same efficiency as its existing resources. (1 mark)

AD ___

AS ___

PL ___

GDP ___e. If economists make a prediction that the expected rate of inflation will

increase. (1 mark)

AD ___

AS ___

PL ___

GDP ___

f. Show what will happen in the Canadian economy if there is an expectation

that income will rise for Canadians.

(1 mark)

AD ___

AS ___

PL ___

GDP ___

g. Older workers are replaced by younger workers who have inferior work

skills and display little if any enthusiasm. (1 mark)

AD ___

AS ___

PL ___

GDP ___

h. Immigration rates are doubled bringing in workers who have better skills

than the current workers and 4 new resources of raw materials are

discovered. (3 marks)

AD ___

AS ___

PL ___

GDP ___

Version:0.9 StartHTML:0000000105 EndHTML:0000007882 StartFragment:0000000141 EndFragment:0000007842

Assignment 2-10: Aggregate Supply / Demand

Draw a separate diagram for each of the following questions. Begin each solution by drawing both an AD and

AS curve to illustrate the equilibrium condition. For each of the questions draw a new curve (either demand or

supply or both!) that illustrates the new shift in the appropriate way. Some questions are tricky, so ensure

that you have the factors that cause . . . . Be sure to label your diagram thoroughly showing the effects on

equilibrium price level and GDP.

a. The impact of a decline in the discount lending rate by the Bank of Canada.

(1 mark)

AD ___

AS ___

PL ___

GDP ___

b. The efficiency with which the Canadian economys existing productive

resources could be utilized is decreased by 20%. (1 mark)

AD ___

AS ___

PL ___

GDP ___

c. Show what will happen in the Canadian Economy if the U.S. dollar

depreciates. (1 mark)

AD ___

AS ___

PL ___

GDP ___

d. The Canadian economy has 30% more of all productive resources, which

could be used at the same efficiency as its existing resources. (1 mark)

AD ___

AS ___

PL ___

GDP ___e. If economists make a prediction that the expected rate of inflation will

increase. (1 mark)

AD ___

AS ___

PL ___

GDP ___

f. Show what will happen in the Canadian economy if there is an expectation

that income will rise for Canadians.

(1 mark)

AD ___

AS ___

PL ___

GDP ___

g. Older workers are replaced by younger workers who have inferior work

skills and display little if any enthusiasm. (1 mark)

AD ___

AS ___

PL ___

GDP ___

h. Immigration rates are doubled bringing in workers who have better skills

than the current workers and 4 new resources of raw materials are

discovered. (3 marks)

AD ___

AS ___

PL ___

GDP ___