Statistics Canada reported that in the second quarter of 2017 Canadian exports increased by $14 billion. Explain and draw a graph to illustrate the effect of an increase in exports on equilibrium real GDP in the long run. Exports increase by $14 billion and the aggregate demand curve shifts to AD₁. Draw a point at the new short-run equilibrium. Label it 1. Draw a point at the new long-run equilibrium. Label it 2. 150- 145- 140- 135- 130- 125- 120- 115- 110- 105- 100- Price level (GDP deflator, 2007 = 100) LAS 115 ADO SAS AD₁1 95- 1600 90- 1520 1540 1560 1580 1600 1620 1640 1660 1680 1700 11 Real GDP (billions of 2007 dollars)

Statistics Canada reported that in the second quarter of 2017 Canadian exports increased by $14 billion. Explain and draw a graph to illustrate the effect of an increase in exports on equilibrium real GDP in the long run. Exports increase by $14 billion and the aggregate demand curve shifts to AD₁. Draw a point at the new short-run equilibrium. Label it 1. Draw a point at the new long-run equilibrium. Label it 2. 150- 145- 140- 135- 130- 125- 120- 115- 110- 105- 100- Price level (GDP deflator, 2007 = 100) LAS 115 ADO SAS AD₁1 95- 1600 90- 1520 1540 1560 1580 1600 1620 1640 1660 1680 1700 11 Real GDP (billions of 2007 dollars)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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