Suppose that an increase in world oil prices leads to greater aggregate demand for Canadian exports of oil and no change in Canadian aggregate supply. The short- term effect on the Canadian price level would be called

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An increase in world oil prices would lead to an increase in demand for Canadian exports of oil, which would lead to an increase in aggregate demand. Since there is no change in Canadian aggregate supply, the result would be an increase in prices, or demand inflation.

Suppose That an Increase in World Oil Prices Leads to Greater