Discuss the factors that affect Aggregate Demand in Canada. Distinguish between a movement along the AD curve and a shift of the AD in terms of which factors cause each.

(b) Draw diagrams of the three states of the economy. Explain what economic conditions are in each state.

(c) Explain how policymakers can use Fiscal Policy and Monetary Policy to restore the economy to full employment when the economy is:

(i) In a recession

(ii) In a high inflation.