Question #1:

1. Using the ADIAS model, discuss the lll'l' the following changes affect the price level and real GDP in the economy in the short run. (9 marks} a} Change: wage rate increases Effect on the economy: Price level Real GDP Diagram :- an as h} Change: rise in real interest rates Effect on the economy: Price level Real GDP AD AB P 1 c) Change: Exchange rate falls {the value of the Canadian dollar falls) Effect on the economy: Price level Real GDP AD A5 P { Dlagram 2. Given the following table, calculate the following economic variables country population Nominal GDP CPI Labour Labour unemployed force force population A 35,000,000 1,200,000,000,000 125 21,000,000 19,000,000 300000 B 63,000,000 2,040,000,000,000 116 49,000,000 43,000,000 620000 a) For each country, calculate the real per capita GDP, unemployment rate and labor force participation rate (6 marks) Country A Real GDP Real per capita GDP Unemployment Rate Labor Force Participation Rate Country B Real GDP Real per capita GDP Unemployment Rate Labor Force Participation Rate b) Jason wants to move to country A or country B. Where should he live and why