Suppose the Canadian economy is experiencing an inflationary gap. To close the gap, the Bank of...

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Suppose the Canadian economy is experiencing an inflationary gap. To close the gap, the Bank of Canada should engageinexpansionary fiscal policy.expansionary monetary policy.contractionary monetary policy.contractionary fiscal policy.Adjust the graph to show how the Bank of Canada's decision affects the moneymarket.Interest rate (r)Quantity of moneyMoney supplyMoney demand
The real interestratedecreases.increases.does not change.The change in the interest rate causes investment and consumer spendingtostay the same.decrease.increase.Shift the aggregate demand (AD) curve, short-run aggregate supply (SRAS) curve, and/or long-run aggregate supply (LRAS) curve to show how the Bank of Canada's action affects equilibrium in themacroeconomy.Aggregate price levelReal GDPLRASSRASAD
The aggregate price levelwillincrease.decrease.stay the same.Consider the foreign exchange market between Brazil and the Canada. How would a change in the aggregate price level impact the foreign exchange market below? The currency of Brazil is the Brazilian real.Exchange rate (real per $)Quantity of Canadian dollars ($)Supply of Canadian dollars ($)Demand for Canadian dollars ($)
The Canadian dollarwilldepreciate relative to thereal.not change in relation to the real.appreciate relative to thereal.

suppose-the-canadian-economy-is-experiencing-an-inflationary-gap-yylfcdte-pidj3uhd.docx

Komalavalli · Accepted Answer

Short run equilibrium
1000 -2P+0.8Y = (100W+0.1WY)/120
120*(1000-2P+0.8Y) = 100W+0.1WY
12000 -240P+96Y = 100W+0.1WY
100W+0.1WY + 240P-96Y=12000
In long run 
Y = 3000
100W+0.1WY + 240P-96Y-12000
100W+0.1W*3000 + 240P-96*3000=12000
100W+300W + 240P-288000=12000
400W + 240P =300000
400W = 300,

Suppose the Canadian economy is experiencing an inflationary gap. To close the gap, the Bank of Canada should engageinexpansionary fiscal policy.expansionary monetary policy.contractionary monetary...

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