Assignment 1 Unit 3: Macroeconomics Activity 5: The Business Cycle In the exercise below, consider whether the economic event that is described will lead either to an injection or a leakage, and whether the effect is likely to cause an expansion in the level of Canada's national income. Economic Event A survey shows that consumers expect to see a sizeable rise in employment over the next twelve months The government decides to increase spending on Canada's national rail network Ahead of a general election, the government announces a reduction in the basic rate of income tax from 24% to 22% Fear of terrorist attacks lead to a reduction in stock prices and a decline in the values of the overall stock market The federal government reduces the amount of an import tari' (or tax) that had been placed previously on imported clothing and footwear General Motors and Chrysler decide to close three car manufactm'ing plants in Ontario The Bank of Canada decides to reduce interest rates by one percent Change in an injection or change in a leakage in the circular ow (select your preferred answer and explain why) Likely effect on the level of national income expansion of contraction (select your preferred answer and explain why) The government of Alberta hires a large United States company to help the province to develop northern oil reserves The government of Canada increases the Goods and Services Tax (GST) by two percent The Canadian government announces the sale of three Candu nuclear reactors to India The price of a barrel of oil on the world's market increases by $12. New housing starts increase by 11% in one year Change in an injection or change in a leakage in the circular flow (select your preferred answer and explain why) Likely effect on the level of national Income - expansion of contraction (select your preferred answer and explain why)