Question 1 (11 points) Suppose that droughts in Ontario and floods in Manitoba substantially reduce food production in Canada. Use the aggregate demand-aggregate supply model to illustrate graphically the impact in the short run and the long run of this adverse supply shock. Be sure to label:

v. the short-run equilibrium values;

and

vi. the long-run equilibrium values. State in words what happens to prices and output in the short run and the long run.