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Under what circumstances might the inflation rate

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Global Insight (GI) forecasting firm predicted that the Canadian economy will shrink by 1.4 percent on an annualized basis in the last quarter of 2008 and a further 1.2 percent in the first quarter of 2009. The firm sees substantial job losses as the recession takes hold. 

a. What evidence does GI present to support the view that Canada had entered a recession?

b. Use a short-run Phillips curve to explain why the inflation rate may decrease over the course of 2009.

c. Under what circumstances might the inflation rate not decrease during 2009? 

Reference no: EM13993248

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