The share of American spending on Canadian goods is about 80% of Canadian exports, which are themselves equal to about 40% of GDP. What is the share of American spending on Canadian goods relative to Canadian GDP? 

b. Assume the multiplier in Canada is 2 and that a recession in the U.S. has reduced output by 5% (relative to its natural level). U.S. imports are about 10% of U.S. GDP. What is the impact of the U.S. slowdown on Canadian GDP? 

c. If the U.S. recession also leads to a slowdown of the other economies that import goods from Canada, the effect could be larger. Assume exports to all countries fall by 5% (of themselves). What is the impact on the Canadian GDP?

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Impact of US Economy on Canada a Share of American Spending on Canadian Goods Relative to Canadian GDP Heres how to find the share of American spendin... View the full answer