Question: The chart below represents the initial equilibrium of the US aggregate market. Suppose a US trade partner, Canada, suffers a recession. Describe the short-run impact

The chart below represents the initial equilibrium of the US aggregate market. Suppose a US trade partner, Canada, suffers a recession. Describe the short-run impact of Canada's recession on the US economy. If you were a US president, name one fiscal policy you'd introduce to help mitigate any negative impact of the Canada's recession on the US economy. Describe what happens to the US economy after your fiscal policy is enacted & find the long-run equilibrium. Assume all shocks are unanticipated, and other things are constant.

Market of All Goods and Services, US Price Index LRAS SRAS, P1 AD 1 Real GDP

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