Question: a) Canada announces that it will be eliminating tariffs on foreign goods one year from now, what will happen to the value of the Canadian

a) Canada announces that it will be eliminating tariffs on foreign goods one year from now, what will happen to the value of the Canadian dollar? Explain.

b) Suppose the governor of the Bank of Canada announces a new set of reforms that includes a sharp increase in the policy rate. what will happen to the exchange rate on the Canadian dollar? Explain using graph and words.

c) Bank of Canada increases the policy interest rate by 50 basis points to 4.25%. What is the Bank Rate? What is the deposit/lending rate? Is this a contractionary or expansionary monetarily policy? Explain

d) If the Bank of Canada sells $2m worth of bonds to John Kohler, the Investor. John Kohler pays for the bonds with cash. what happens to reserves and the monetary base? Explain.

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