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1. Suppose the people of a certain economy increase their spending on foreign- produced goods and services. What will be the effect on real GDP

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1. Suppose the people of a certain economy increase their spending on foreign- produced goods and services. What will be the effect on real GDP and the price level in the short run? In the long run? Show your results graphically. 2. Trace the impact of an expansionary monetary policy on bond prices, interest rates, investment, the exchange rate, net exports, real GDP, and the price level. Illustrate your analysis graphically. 3. Assume that Canada is initially in long run equilibrium with price level of P1 and GDP of Y1. Discuss and show with diagrams how each of the following four events would affect aggregate demand, the price level and real GDP of Canada There is a sharp rise in Canada's exchange rate b. A wave of pro-Canadian sentiment sweeps the U.S. and people in U.S. increase their consumption of Canadian goods C. There is a recession in China, which is a large importer of Canadian agricultural goods 19890 d. Due to a global health concern, there is a travel restriction of foreign travellers coming to Canada 4. Can there be a deficit on current account and a deficit on capital account at the same time? Explain giving an example. 5. What are the three types of unemployment? Identify what type of unemployment will result from the following scenarios a. Tom, who is a factory worker, has been laid off as his job has been replaced by robots b. Jane has quit her existing part-time job as she has completed college and wants to find full time work C. The business Hank was working for had to shut down as there has been a decrease in overall demand in the economy

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