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Q. Global Insight (GI) forecasting industry predicted that the Canadian economy will shrink by 1.4 percent on an annualized basis in the last quarter of 2008 also a further 1.2 percent in the 1st quarter of 2009. The industry sees substantial job losses as the recession takes hold.
a. Illustrate what evidence does GI present to support the view that Canada had entered a recession?
b. Utilize a short-run Phillips curve to explain why the inflation rate may decrease over the course of 2009.
c. Under Illustrate what circumstances might the inflation rate not decrease during 2009?
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