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(1) Expansionary fiscal policy (2) Contractionary fiscal policy Problem: Recession, slow growth Problem: Inflation Expansionary fiscal policy Contractionary fiscal policy Higher domestic interest rate Lower

(1) Expansionary fiscal policy

(2) Contractionary fiscal policy

Problem: Recession, slow growth

Problem: Inflation

Expansionary fiscal policy

Contractionary fiscal policy

Higher domestic interest rate

Lower domestic interest rate

Increased foreign demand for dollars

Decreased foreign demand for dollars

Dollar appreciates

Dollar depreciates

Net exports decline (aggregate demand decreases, partially offsetting the expansionary fiscal policy)

Net exports increase (aggregate demand increases, partially offsetting the contractionary fiscal policy)

Q1) As represented in the table above, explain both Expansionary and Contractionary fiscal policies.

Q2) What is Canada's Net Public Debt in 2021?

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