Problem 2 (30 marks) Go to Statistics Canada website and find the most recent data on inflation and unemployment. a. What is the most recent inflation rate for Canada? What is Canada's "usual" inflation rate over the past two decades? Is the current inflation rate higher or lower than usual? Why do you think that is? b. What is the most recent unemployment rate for Canada? What is Canada's "usual" unemployment rate and what is the name economists use for it? Is the current unemployment rate higher or lower than usual? Why do you think that is? c. Draw the AD-AS model. Assume that the economy is initially in long-run equilibrium. Label this equilibrium A d. What curve(s) should shift in the AD-AS model to explain the current inflation rate and unemployment rate? Show the shift(s) on your diagram and label the current short- run equilibrium B. e. Given the changes in the economy since the beginning of the COVID-19 pandemic, explain intuitively why do you think the curve(s) have shifted. f. If there is no intervention from the government and the central bank, the economy has the ability to adjust back to some long run equilibrium on its own. Explain how this process of self-adjustment works, which curve(s) will shift and how. Show the new curve(s) on your diagram and label the new long-run equilibrium C. g. What happens to the level of output, prices, inflation rate and the unemployment rate as the economy adjust from B to the new long-run equilibrium C? h. Does the economy return to the same long-run equilibrium or a different one compared to where it started (meaning, is C the same point as A or different? How do the new long-run values of output, price level, inflation rate and unemployment rate compare to the old long-run values (are they higher, smaller, the same)