Aggregate supply grows over time because of growing consumer and government spending.  True or  False

Assume the Canadian economy is currently at equilibrium. a. Using a correctly labeled aggregate demand and supply graph, show Full employment output (yf)    Current price level (PL1)    b. World War III breaks out and Canada has to get involved. The Prime Minister chooses to increase the military budget by 40%. On your graph from part A, show what will happen in the economy, labeling the new equilibrium as Q2, PL2. c.  Using a correctly labeled graph of the loanable funds market, show how the Prime Minister’s decision will affect the economy.

A reduction in regulation will shift the aggregate: Demand curve left. Supply curve left. Demand curve right. Supply curve right.

The Recovery: Utilizing the Aggregate Demand/Aggregate Supply framework describe what has happened during the recovery from the recession from May 2020 (Q2 2020) to the present March 2022 has happened to real GDP since the end of the recession in Q2 of 2020? How about inflation and unemployment? How big is the gap between actual and potential real GDP? Describe the current state of the economy relative to real potential GDP (Links to an external site.).

Y =  C +  S even when the economy is not in equilibrium.  True Or False

Suppose that the government decreases spending more than is necessary to close an inflationary gap. What is the MOST likely result? Inflation will increase. The price level will increase. Aggregate output will fall short of potential output. Aggregate output will increase.

why does the budget require a forecast of the economy? under what circumstances would actual government spending and tax revenue fail to match the budget as approved?

If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then: a) government borrowing is likely to crowd out private investment. b) an inflationary increase in the price level is in real danger. c) the central bank might react with an expansionary monetary policy. d) higher interest rates will crowd out private investment.

The savings rate in a country is 25%. The government wants to expand GDP by $300 Billion. How much must they increase Government spending to reach that goal?

The government decides that it will cut taxes in an attempt to move the economy out of a severe recession