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 scenarios has on the relevant economy. Be sure to identify the cause of any shift or movement along AE, AD, and/or SRAS. [Hint: Your diagrams for each part should look something like those in Figure 23-8, or 23-10 in your text.] (a) Due to the decrease in world oil prices, Canadian oil and gas companies reduce investment spending. [4] (b) Depreciation of the Euro leads to an increase in exports for the Euro-zone and a reduction in the marginal propensity to import in the Euro-zone. [5] (c) Canadian productivity rapidly increases, while at the same time Canadian exports increase due to a growing US economy. [5]

Reference no: EM13739720

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