Questions

1.In this question, we are going to use AS-AD model to analyze the impacts of the COVID-19 pandemic on the economy of the US and then test the predictions of the model by real data.

a.By using AS-AD model show the impacts of the pandemic on the economy of the US on GDP, price level, and unemployment rates in the short-run. Explain your answer.

b.Visit the Website of the Bureau of Economic Analysis. Under section 1, by using "Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product": https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey

Answer the following question:

Does the real data support your results in part a? You need to provide a graph for data for GDP, Consumer spending, and investment. Note, you can use the "Chart" feature in the website and download graphs.

2.What would happen to the rate of economic growth in Canada if government decides to accept more immigrants? Use labor market and production function to explain your answer.

3.Use the model of aggregate demand and short-run aggregate supply to explain how each of the following would affect real GDP and the price level in the short run.

a.an increase in government purchases

b.a reduction in nominal wages

c.a major improvement in technology

d.a reduction in net exports

4.India's GDP per capita is $2000. Assume real GDP per person in India grow by 4% per year. Using the rule of 72, how many years will it take for India to reach Canada's current level of GDP per capita, about $48000 per year?