The world goes into an expansion.This event
A)increases Canada's short- run aggregate supply.
B)decreases Canada's aggregate demand and decreases Canada's short- run aggregate supply.
C)decreases Canada's aggregate demand.
D)increases Canada's aggregate demand.
E)increases Canada's long- run aggregate supply.

Question

Quizplus · Accepted Answer

When the world goes into an expansion, it leads to an increase in demand for goods and services globally. This, in turn, leads to an increase in Canada's aggregate demand as it relies heavily on trade with other countries. An increase in aggregate demand leads to an increase in Canada's short-run aggregate supply as companies produce more to meet the demand. However, it is important to note that this increase in aggregate demand may not necessarily lead to an increase in Canada's long-run aggregate supply as it depends on factors such as technology, productivity, and infrastructure.

The World Goes into an Expansion.This Event