1.Use the model of aggregate demand and aggregate supply (short run) to explain how each of the following would affect real GDP and the price level in the short run. Include graphs in your answers.

a.A decrease in government purchases

b.A major improvement in technology

c.A reduction in net exports

d.An inflation

2.The Canadian government wants to use an open immigration policy which encourages more people to move to Canada as they believe this can contribute to economic growth in the country.

3.

4.Do you support this viewpoint of the government? Justify it using the 3 diagrams (production function, job market and AD and AS in the LR).

Question 3 ( 7 marks):

1.Suppose that potential output is $7,000 billion per year. Suppose a technological change increases the economy's output $7,100 billion.

2.Calculate the GDP growth rate and number of years to double the GDP

3.Calculate the growth per capita if the population growth is 3%, comment about the standard of living in this country.