8. Do the following events have their lnldallmpaz'ton aggregate demand, long run aggregabe supply. or short run aggregate supply? Do the curves shift to the right or to the left? Show. using a graph for each question. a. The new government in Canada increases income taxes. AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: b. There has been an increase in investment in postsecondary education in Canada AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: c. Canada experiences downward pressure on nominal wages AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: 9. Suppose the economy had been operating at its potential level of real GDP in the past, but net export and consumer spending have suddenly and substantially declined. The decline is expected to last for a significant period of time. (a) Use an appropriate diagram to illustrate the initial impact of stated event on the economy. (b) What impact would the event have on the economy's [i] price level, [ii] level of real GDP, iii] unemployment rate, and [iv] government budget deficit [i.e. increase, decrease, no effect, indeterminate]? i] Price: [ii] Real GDP: [iii ] Unemployment: [iv ] Budget Deficit: (c) Describe two different examples of government fiscal policy that could be used to correct the situation outlined at the start of the question. (2 marks) [i] liiUse an appropriate diagram to illustrate the impact of stated event on the economy of the fiscal policies you have described. (d) When compared to the economy's position prior to the use of such policies, what specific impact would the fiscal policies have on the economy's [i] price level, [ii] level of real GDP, [iii] unemployment rate, and [iv] government budget deficit [i.e. increase, decrease, no effect, or is the outcome indeterminate]? [i] Price: [ii] Real GDP: [iii] Unemployment: 8 [iv ] Budget Deficit