Higher Interest Rates Will Increase Ottawa's Budget Deficits, Report Warns

A University of Ottawa Institute of Fiscal Studies and Democracy report says that rising interest rates will produce larger federal government deficits.

Source: The Globe and Mail, June 30, 2017

6.How does a government get funds to cover a budget deficit? How does financing a budget deficit affect the central bank's monetary policy?

7.a.How would the budget deficit change in 2018 and 2019 if the Bank of Canada moved interest rates up to 2 percent or higher?

b.How would the budget deficit change in 2018 and 2019 if the Bank of Canada's monetary policy led to a rapid appreciation of the dollar?