Using diagrams for aggregate expenditures (AE) and aggregate demand and supply (AD-AS), show the short- run effects each of the following events has on the Canadian economy. Be sure to identify the cause of any shift or movement along AE, AD, and/or AS and in each case, identify whether the event leads to an increase or decrease in national income (Y) and/or the price level (P). [Hint: Your diagrams for each part should look something like those in Figure 23-8, or 23-10 in your text.]
(a) The government reduces tax rates.
(b) A reduction in the world price or crude oil leads to a reduction in investment spending in Alberta.
(c) A general increase in wages leads to an increase in Canadian production costs.
(d) The discovery and rapid adoption of cold fusion technology leads to a decrease in unit costs for all Canadian producers and a decrease in the dollar value of Canadian oil exports.