Match the concept with the definition

Suppliers will collectively react to changes in their macroeconomic environment. In the AD-AS framework, these reactions are modelled differently depending on the type of variable.

Associate the shock with the appropriate prediction from the AD-AS simulation. Always consider that other variables are held constant, Ceteris Paribus.

Associate each variable to the correct curve, and it's shift.

The AD-AS model of macroeconomic activity is a work-horse for economists because it allows to blend many perspectives, such as the Keynesian view (to some degree) and the Classical view. However, the model implies that more growth is always better, as long as it does not bring inflation. This implication has enormous consequences for the environment and green house gas production, which suffer from non-monetized secondary output.

How can we reconcile the macroeconomic preference for growth with the natural limits of the planet we live on?

The slope of the AS curve is positive (upward). This is because

Given the chart below, how do you feel about the Bank of Canada's policy during the COVID-19 pandemic?

Match the statement with the central bank policy.

The money supply curve horizontal, according to modern thought, because private banks are the main creators of credit, and they respond to a shift in the interest rate set by the central bank.

Since the mid-1990's, the Bank of Canada uses the technique of interest-rate targeting, rather than direct money-supply management, to conduct monetary policy.

Choose the option that best represents interest-rate targeting.