The Canadian economy is in long run equilibrium with real GDP equal to Y*. The United...

 

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The Canadian economy is in long run equilibrium with real GDP equal to Y*. The United States economy goes into a recession causing a major fall in exports of goods and services from Canada. Please use a separate graph/diagram to answer each question a) For the Canadian economy, illustrate the initial long run equilibrium in a diagram and explain your answer. b) What kind of stock occurred and what type of output gap for the Canadian economy. Explain your answer with the aid of a diagram. c) Explain the process by which the Canadian economy will self-adjust back towards Y* in the long run. Explain your answer with the aid of a diagram. d) What could policymakers do return the Canadian economy back to Y*. Explain your answer with the aid of a diagram. The Canadian economy is in long run equilibrium with real GDP equal to Y*. The United States economy goes into a recession causing a major fall in exports of goods and services from Canada. Please use a separate graph/diagram to answer each question a) For the Canadian economy, illustrate the initial long run equilibrium in a diagram and explain your answer. b) What kind of stock occurred and what type of output gap for the Canadian economy. Explain your answer with the aid of a diagram. c) Explain the process by which the Canadian economy will self-adjust back towards Y* in the long run. Explain your answer with the aid of a diagram. d) What could policymakers do return the Canadian economy back to Y*. Explain your answer with the aid of a diagram.

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a In following graph initial longrun equilibrium is at point A where ADO aggregate demand LRASO long... View the full answer