Write down six hundred words theories and concepts learned in Macroeconomics to explain a real-life economic situation.

An exampleis included as below:

During the past year and in particular recently, I found prices in Canada, and more specificallyfood prices, have been risingquite fast. Based on what I learned in Macroeconomics this semester, I can explain that by the following:

1. The equation of exchange M*V=P*Q, and the derivative formula: inflation rate=money supply growth rate-real GDP growth rate. (chapter 12). Money supply in Canada grew 20% in Feb 2021 compared with same period last year (source: Bank of Canada); real GDP for the year 2020 dropped 5.5% (source: Statistics Canada). assuming money velocity does not change much, inflation rate = 20% - (-5.5%) = 25.5%. Based on that, I expect inflation rate will go even higher for the rest of the year.

2. Food prices have increased even more than general prices since foods are non-durable goods. We learned non-durable goods consumption generally does not drop much even in a recession such as the one we are in right now. (chapter 6). Therefore, the demand ofnon-durable goodssuch as food remains high while the demand ofdurable goodssuch as cars and computers will drop dramatically during a recession. Therefore, the increase in the price of food far exceeds the increase in the price of cars and computers.

Please include more details such as data, charts, numbers, quotes, interviews, reports and your analysis to make your point.