As some pandemic benefits expire, feds to spend $7.4B on new programs

OTTAWA -- The federal government has announced a suite of changes to the popular income and business support programs put in place during the pandemic and set to expire on Saturday.

Deputy Prime Minister and Finance Minister Chrystia Freeland reminded Canadians on Thursday that the measures were always intended to be temporary.

Were moving from the very broad based support that was appropriate at the height of our lockdown to more targeted measures that will provide help where it is needed while prudently managing government finances, she said.The changes come with a price tag of $7.4 billion.

2a)Draw the AD/SRAS/LRAS diagram and indicate clearly the effect of these spending on the Canadian economy in the short run. Also explain the effects on inflation and unemployment.

2b) In the same graph, show how it can return to long run equilibrium.