A5-10. Analyze the short-run effects on the Canadian economy of each of the following events using aggregate expenditure (AE) and aggregate demand…

A5-10. Analyze the short-run effects on the Canadian economy of each of the following events using aggregate expenditure (AE) and aggregate demand and supply (AD-AS) diagrams. In each case, identify the cause of any shift or movement along AE, AD, and/or AS and note the effect on national income (Y) and the price level (P). [Hint: See Fig 23-8.]

a) A change in tastes leads Canadian consumers to transfer their video spending from domestic cable TV services to domestic video streaming services. [4] 

b) In response to the tax reform package recently passed in the US, the Canadian government reduces domestic tax rates. [5] 

c) As a result of the collapse of the NAFTA renegotiation, Canadian exports are reduced. [5] 

d) An increase in wages leads to an increase in unit costs for Canadian producers. [5] 

e) As a result of rapid technological change in renewable energy production the price of energy decreases leading to a decrease in unit costs for all Canadian producers and a decrease in the dollar value of Canadian oil exports. [7] 

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