Question
33. Multiple Shocks in an Open Economy In 2015, two major events are happening at the same time. 1: Alberta's oil sands become less profitable,
33. Multiple Shocks in an Open Economy In 2015, two major events are happening at the same time. 1: Alberta's oil sands become less profitable, reducing investment in the country by foreign investors. 2: Slower Chinese economic growth reduces demand for Canadian lumber exports. By assumption, Canada is a "small open economy", and initially its trade balance is positive (XN > 0). Describe, with macroeconomic justification, the long-term impact of these two simultaneous events (1 and 2) on (4 points each): i. the real interest rate, ii. the level of national savings, iii. Canadian net investment abroad, iv. the real exchange rate and V. the trade balance. Please I'm asking for some help here
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started