1.a. In the short run, if the Bank of Canada wants to fight a recession, should it buy or sell government securities? Why?

b. What are the consequences of the Bank of Canada actions in the long run assuming the economy is at full employment?

1.How do the Bank of Canada's actions change the exchange rate?

2.Suppose Parliament decided to strip the Bank of Canada of its monetary policy

powers and decided to legislate interest rate changes. How would you expect the

policy choices to change? Which arrangement would most likely provide price

stability?