This assignment has 2 distinctive parts. Choose one part of your choice to attempt.

PART A (exchange rates' relation to Canada's economy)

Background:

For the part A, you have been assigned by the Government of Canada as chief economist whose mainly responsible for exchange rates and payments with ROW.Your top responsibilities include proper economic functioning of Canada's top industries (example: manufacturing, natural resources, and mining). Those industries, due to their size relative to the whole economy can have considerable effects on the demand and supply of the Canadian dollar, real GDP, Unemployment and inflation. (+ international balance of payments).

We will tackle 2 scenarios:

Senario 1:Our top industries are doing well vs. USA -describe what is happening to:(e.g. more Americans are buying Canadian products)

a) The Canadian dollar (appreciating, depreciating, effect on CAD demand and supply)

b) The American dollar (Appreciating, depreciating, effect on USD demand and supply)

c) Canada's real GDP (growing, declining, etc....)

d) Canada's Unemployment rate

e) Inflation

f) international balance of payments (current account and financial account)

Provide a thorough explanation for each point listed above.

Scenario2:Competition from the USA'stop industries are negatively affecting us. describe what is happening to:(e.g. more Canadians are buying American products)

1. The Canadian dollar (appreciating, depreciating, effect on C$ demand and supply)
2. The American dollar (appreciating, depreciating, effect on US$ demand and supply)

c) Canada's real GDP (growing, declining, etc...)

d) Canada's Unemployment rate

e) Inflation

f) International balance of payments (current account and financial account)

Provide a thoroughexplanation for each point:

(Balance of payments )

1- What are Canada's top exports by industry for the period 2015- 2019/2023 (excel table and chart required)

2- What are Canada's top imports by industry for the period 2015-2019/2023 (excel table and chart required)

3-Exports: Who are Canada's top 5 major trading partners/ countries for the period 2015-2019/2023 (excel table and chart required)

4-Imports: Who are Canada's top 5 major trading partners/ countries for the period 2015-2019/2023 (excel table and chart required)

5- What are Canada's major investments around the world (in general)?

Explain the type, the amount of investment (if available) and the country where the investment is held.

6-What are the top investments of countries in Canada?

Explain the type, the amount of investment (if available) and the country where the investment is held.

OR

Part B

Answer the 6 questions below:

1. Suppose the Canadian economy is experiencing inflation higher than desired but has relatively high output and low unemployment. What monetary policy actions may the Central Bank of Canada may take to reduce inflation?

1. Using the aggregate demand and aggregate supply framework, what happens to inflation and output when the Bank of Canada uses a contractionary monetary policy?

1. If the Bank of Canada is successful in reducing inflation, what will the likely impact be on the unemployment rate in Canada?

1. If banks are currently holding excess reserves will all the Bank of Canada's tools be equally effective? Examine how each of the Bank of Canada's three policy tools will affect the money supply when banks hold excess reserves.

1. Since the end of the Great Recession, interest rates have been at historic lowsin some cases, close to zero. How is expansionary monetary policy, or more specifically open market purchase, supposed to work? How do near-zero interest rates limit the ability of expansionary monetary policy to work?

1. Consider the following items:

• Gold Coins
• Grocery Store Coupons
• Funds in a checking account
• Funds in a savings account
• 100 shares of Google stock
• Food Stamps

Which of these items is the best example of money? Which is the worst? How would you order the list from most money-like to least money-like? Explain your reasoning.

Marking Scheme

Item	Marks Possible	Your Mark
	5
-Spelling and grammar	5
Part A (minimum 6 full pages) OR Part B (minimum 6 full pages , )	40
Total	50

Submission and deadline: