Question
2 Finance Minister Chrysha Freland tabled the federal budget this month. The government is focusmg on some key sectors of the economy as Canada
2 Finance Minister Chrysha Freland tabled the federal budget this month. The government is focusmg on some key sectors of the economy as Canada comes out of the Coud 19 pandemic. The key areas includes: Indigenous reconciliation, Diversity and Inclusion, Environment and climate change, Defence and security, and Affordable housing. The other major observation is the size of the deficit which IS about S52_8 Billion. This is half of the deficit last year. a. What hctors could account for the decrease in the size of the deficit? (2 marks) b _ Define fiscal policy and State two examples of such policy. (3 marks) c. What components of aggegate demand does fiscal policy affect? (2 marks) d. How will federal govemment spending on the above areas y' sectors affect the Sholt run and long mn aggregate supply. {Do not include diagrams or graphs/ (4 marks) e. Using the Aggregate demand and supply diagram, demonstrate the impact, (long and short run), of Increase government spending on the Canadian economy. [Include and explain the graphl (4 marks)
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