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A5-10. Analyze the short-run effects on the Canadian economy of each of the following events using...

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

(b) 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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