Description: CASE ANALYSIS: You need to analyze the “short-run” and “long-run” effect on Canadian Economy of a Trump’s presidency. In doing so, just use the simple AD-SAS-LAS model developed in class (Chapter 8). Draw graphs with explanation and clearly label the graphs. The graph/graphs should follow a clear analysis. You need to consider the following four factors while analyzing, keeping every other factor constant. You need to analyze all the following factors jointly in determining which curve/curves will shift (AD, SAS and/or LAS). Careful, some shifts in curves may offset each other (e.g. one factor can shift the AS right, and another will shift it to left. You can make assumptions on which one would dominate but state the assumptions clearly). You need to clearly explain the short-run” and “long-run” impact on Canadian GDP, Price level, inflation, exchange rate, potential GDP, employment etc. Read Chapter 8 carefully to write this assignment. No need to read too many online sources. We are looking for specific answers, so when you take into account the following factors, please keep all of your other random thoughts and factors constant. Factors to consider: 1) Because of Trump’s view on U.S. immigrants and “Dreamers”, a lot of skilled and unskilled labors may leave U.S. and come to Canada 2) If Trump is able to renegotiate NAFTA and the trade deal with Canada, Canadian export may get hurt for a little while 3) If Trump reduces corporate and individual tax rate in U.S., this may increase U.S. GDP in the short-run by increasing U.S. residents’ income and potential consumption 4) With “stronger” U.S. dollar due to increased tax or the notion that “Trump will make U.S. great again”, our Canadian dollar can relatively depreciate
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Submitted by mwangindavid on November 23rd, 2017 17:15
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