Questions 1-3 only require fill in the blank answer. Answer options provided! No solution or steps needed just answer! For question 4 please explain your answer. Thanks a lot!

Question 1

Suppose that the Canadian economy is characterized by point A, where Yn is the potential output. We know that the economy is Price Levels, P AS Curve A P*. .. . AD Curve Yn Output, Y Figure 2. O in a short-run equilibrium O in a medium-run equilibrium O is not in an equilibriumSuppose that households expect the market price to be $50 (i.e., P3 = 50). The market price at point A in Figure 2 is I [ Select] exactly 50 larger than 50 smaller than 50 unknown As in Question 1&2, the economy was at Point A initially. An unexpected negative demand shock shifts the AD curve to AD' as shown in Figure 3. Households follow adaptive expectations. 1. If the shock is long-lasting (i.e., the AD curve stays at AD'), the economy converges to Point in the medium run. 2. If the shock is temporary (i.e., the AD curve returns back to its initial position AD), the economy converges to Point [Select] " in the medium run. Price Levels, P AS Curve P1; .................. AD CU I'VE E I AD' Output, Y Figure 3. 1. If the shock is long-lasting (i.e., the AD curve stays at AD'), the economy converges to Poi I [33'9\"] in the A medium run. 2. If the shock is temporary (i. position AD), the economy its initial [ Select] v in the medium run. Suppose that the negative shock is long-lasting (i.e., the AD curve stays at AD'). Please explain in words how the economy evolves from Point B to the medium-run equilibrium