Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
8th Edition
ISBN: 9780134641843
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 29, Problem 10IAPA
To determine
To show:
The effect on real
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In 2007 and 2008, Canada was affected by the global financial crisis that had begun with the U.S. housing collapse.
By 2009, the Canadian economy had entered a recession, largely due to a reduction in investment and a The
policy objective for the Bank of Canada and the government at this time was to
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A. fall in housing starts; shift the AD curve to the left to close the recessionary output gap
B. fall in net exports, shift the AS curve to close the inflationary output gap
C. fall in consumption; shift the AD curve to the left to close the recessionary output gap
D. fall in consumption; shift the AD curve to the right to close the inflationary output gap
E. fall in net exports, shift the AD curve to the right to close the recessionary output gap
(a) Using the appropriate graphs, consider the short run impact of a natural disaster that causes a sudden drop in the capital stock using a real intertemporal model with investment (i.e., the simple intertemporal model without money). Explain the impact on wages, interest rates and investment. Does the model provide an unambiguous prediction for the impact of the disaster on hours worked and short-term output? Why or why not?
Suppose you are the president of a hypothetical economy. You have to fix healthcare and run the automobile industry . But Swine flu is breaking all over.
a) We know that the economy also suffers from sour expectations about future productivity. Represent in a neatly drawn ISLM figure that, all else equal, those expectations, in conjunction with the flu outbreak described in part A above, could result in a decline in GDP and a decline in real interest rates without any change in the price level.
b) Why do prices not rise in the scenario described in part A?
Chapter 29 Solutions
Foundations of Economics, Student Value Edition Plus MyLab Economics with eText -- Access Card Package (8th Edition)
Ch. 29 - Prob. 1SPPACh. 29 - Prob. 2SPPACh. 29 - Prob. 3SPPACh. 29 - Prob. 4SPPACh. 29 - Prob. 5SPPACh. 29 - Prob. 6SPPACh. 29 - Prob. 7SPPACh. 29 - Prob. 8SPPACh. 29 - Prob. 9SPPACh. 29 - Prob. 10SPPA
Ch. 29 - Prob. 11SPPACh. 29 - Prob. 1IAPACh. 29 - Prob. 2IAPACh. 29 - Prob. 3IAPACh. 29 - Prob. 4IAPACh. 29 - Prob. 5IAPACh. 29 - Prob. 6IAPACh. 29 - Prob. 7IAPACh. 29 - Prob. 8IAPACh. 29 - Prob. 9IAPACh. 29 - Prob. 10IAPACh. 29 - Prob. 1MCQCh. 29 - Prob. 2MCQCh. 29 - Prob. 3MCQCh. 29 - Prob. 4MCQCh. 29 - Prob. 5MCQCh. 29 - Prob. 6MCQCh. 29 - Prob. 7MCQ
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