Question
Suppose the economy is in a long-run equilibrium (Label intersection point A). Please use the AD-AS model to explain the effects of the following market
Suppose the economy is in a long-run equilibrium (Label intersection point "A"). Please use the AD-AS model to explain the effects of the following market scenario graphically. Market scenario: Canada is a large purchaser of our export goods. Canada goes into recession, and Canadians' purchasing power decreases. 12.1 What happens to the aggregate output and price level in the short run? (Label intersection point "B"). 12.2 What happens to the aggregate output and price level in the long run without government intervention? (Label intersection point "C").
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