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During the fiscal period 2009-2011 the Canadian Government implemented an Economic Action Plan that involved running the largest budget deficits in Canadian history. Describe and briefly explain in point-form notes below each of the following aspects of this course of action.
1. What macroeconomic circumstances must the government have been facing?
2. What fiscal policies would the government have at its disposal to deal with this problem?
3. Following Keynesian theory "How would the government expect these policies to affect each of the following macroeconomic variables?"
a. aggregate demand
b. aggregate supply
c. equilibrium output
d. equilibrium price level
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