Macro Exam II 1. a) List the three tools of monetary policy. No need to explain. b) Explain clearly how each tool listed is used to fight inflation. 2. Canada encourages foreign immigrants skilled in areas such as engineering, IT, medicine and even mining to apply for jobs and eventually qualify for residency and citizenship. Do you expect the Canadian tax base to expand? Explain two specific examples of how the tax base is likely to expand. 3. The Federal Reserve Bank recently raised interest rates. How is this likely to affect the exchange rate? Show how the changes will affect the foreign exchange graph below. Exchange Rate > # of dollars 4. a) How much is imported before and after the tariff? b) How much tariff revenue is paid to the government as a result of the imposed import tariff? $ 80 NoTrade $50 Tariff $ 30 Free Trade Dd 5 m 20m 33M 420 50m 5. Successive US administrations have accused the Chinese government of manipulating their currency (Yuan) to keep it cheap compared to the US dollar. How are the following affected because of China's actions? a) Imports from China. b) Exports from United States