Imagine That Canada and the U

question 72

Essay

Imagine that Canada and the U.S.only trade internationally with each other.The Canadian government has recently undertaken an expansionary monetary policy.What impact will this have on the Canadian dollar exchange rate and Canada's trade balance? What impact will this have on the U.S.dollar exchange rate and U.S.trade balance? Briefly explain.

---

Definitions:

Lump Sum

A singular transaction carried out at a specific point in time, as opposed to a sequence of smaller installments.

Savings

Money set aside for future use, often accumulating interest in a financial institution.

Rate of Return

The profit or deficit generated from an investment over an indicated time frame, shown as a ratio of the investment's initial cost.

Investments

Items or resources purchased with the aim of earning revenue or increasing in value as time progresses.