1. Suppose the Canadian economy is currently at point K as shown in the diagram above. Give examples of two realistic events that could cause it to move to point N. (5pts)

N AE AE K Real Aggregate Expenditure, AE (billions of 2007 dollars) Real GDP, Y (billions of 2007 dollars)\fTo go from the Canadian economy's point K to point N: 1. The economy may move toward point N if consumer confidence rises and leads to more consumer expenditure. 2. The economy could go to point N if expansionary monetary policy, such cutting interest rates, encouraged iInvestment and consumption. Concerning the issues based on the graph: 1. The vertical intercept of the AE line represents the value of autonomous expenditures. 2. The AE line's slope represents the marginal propensity to consume. 3. The marginal propensity to consume IS represented by the AE line's slope. 4. To identify expenses when income is $3,000, pick the point on the AE line that corresponds to that amount of money and read the value of the associated expense from the graph