Question

1. Suppose a Canadian dollar buys 0.68 Euro. How many Canadian dollars do you need to buy a Euro?

2. 1pt Suppose the Canadian dollar appreciated by 10%. Now how many Canadian dollars would be needed?

3. 2pt Suppose the Canadian dollar is worth 0.75 USD. Acadia tuition costs $10,000 CAD per year, and American tuition costs $12,000 USD per year. Calculate the real exchange rate.

4. 1pt Use the number derived from 3 to conclude whether or not tuition is a better deal in Canada or the United States.

5. 1pt From 3, does purchasing power parity apply? Briefly explain why.

Suppose Y = 1000, C=600, G=220, T=200, I = 160 for questions 6-8. 6. 1pt Calculate NX.

7. 1pt What is private (S) and national (S+T-G) saving?

8. 2pt Based on the above, sketch the market for loanable funds situation for Canada.

Answer 1