Sample Essay

With the help of John Maynard Keynes AD-AS or Aggregate demand – Aggregate supply model, we assess the entry of this crisis in the Canadian economy. The model discusses the price and output level of the relationship between aggregate demand and aggregate supply.

The demand curve shifts rightward and the price goes up when there are many factors involved. In our case, it is an exogenous decrease in imports from other countries. We witnessed a dramatic increase in oil prices due to a halt in the supply of crude oil which caused huge demands for oil and petroleum products i.e. when demand for oil increased; the price went up due to the import constraints imposed by OPEC.

Throughout the crisis, Canada suffered some major downturns in different segments of its economy.  These are primarily the most affected economic variables during the crisis such as: Demand, Price, and Investment. The economy suffered a great monetary loss by failing to meet the local content requirements, as a result prices went up and, having said that, the FDI squeezed earlier than the emergence of Oil Embargo. It produced multi-dimensional effects on the overall economic performance in the long run.[1]

[1] Chee Chee Lim, Steven Haberman, “Macroeconomic variables,” Macroeconomic Variables and the Demand for Life Insurance in Malaysia, n.d [Database on-line]; retrieved from p 7-8

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Essay: Dramatic increase in Oil Prices
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