For each of the following events, explain what happens to the international capital flows into Canada.

a)In an attempt to address housing affordability, the provincial governments of BC and Ontario impose taxes on foreign purchases of residential real estate in 2016 and 2017 respectively. As a result, this slows down the housing markets in Vancouver and Toronto.

b)On July 12, 2017, the Bank of Canada raises its key interest rate, the target for overnight rate, by 0.25 percentage points. It was the first rate hike since 2010.