Aggregate expenditures and aggregate demand and supply

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Using diagrams for aggregate expenditures (AE) and aggregate demand and supply (AD-AS), show the short-run effects each of the following events has on the Canadian economy. Be sure to identify the cause of any shift or movement along AE, AD, and/or AS and in each case, identify whether the event leads to an increase or decrease in national income (Y) and/or the price level (P).

(a) The government reduces tax rates.

(b) A reduction in the world price or crude oil leads to a reduction in investment spending in Alberta.

(d) The discovery and rapid adoption of cold fusion technology leads to a decrease in unit costs for all Canadian producers and a decrease in the dollar value of Canadian oil exports.

Reference no: EM131007693

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