Question

Throughout the 19th and 20th centuries, the Canadian economy experienced frequent ups and downs, but over the past 140 years, the real GDP in Canada rose from roughly $8.2 billion to over $16.1 trillion, an increase by a factor of nearly 2,000 times

This growth represents a change in

a.) aggregate supply

b.) long run aggregate supply

c.) aggregate demand

Answer 1

An increase in the Canadian GDP from $8.2 billion to $16.1 trillion represents a change in the Long Run Aggregate Supply.

A time period of 140 years will be considered as a long run where all the variables in the economy can be changed including technology, capital stock, population etc. All these factors together decide the long-term output of the economy. A short-run aggregate supply curve and short-run aggregate demand curve will have a short run effect where all the variables in the economy can't be changed.