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(a) Suppose that Canada is currently in a full employment equilibrium. Draw a diagram of this economic state. (2 marks) (b) What conditions would you

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(a) Suppose that Canada is currently in a full employment equilibrium. Draw a diagram of this economic state. (2 marks) (b) What conditions would you see in the economy in the full employment state? (3 marks) (c) Suppose that Canada is facing weak Aggregate Demand, low inflation and high unemployment. Explain, using Fiscal and Monetary Policy, Explain how the Government and the Bank of Canada could stabilize the economy. Include diagrams in your answer ( 8 marks )

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