Chapter 7 and 8 L

Question 0

What were some of the results of nafta in Canada?

Answer 0

Before nafta canadian firms were less efficient bc of tariffs.
we needed access to global market.
we relied heavily on trade.
increased wages for Canadians.
we were thought
to lose jobs to Mexico but we gained abut 8 billion dollars in sales.

Question 1

why did the gov want nafta?

Answer 1

• to remove tariffs and reduce costs for domestic manufacturing industry
• to secure access to us market for Canadian goods
• to bring restructuring and adjustment in the Canadian economy.

Question 2

Whydo people think devaluation of the dollar is good? is it?

Answer 2

because a lower dollar means more exports and less imports, ad we would have more jobs.

but it doesn’t help out economy. importers want a strong dollar

Question 3

What determines the exchange rate?

Answer 3

the supply of money does.
the bank of Canada can expand or contract the supply by buying or selling foreign securities.
also, demand for the canadian dollar changes the exchange rate. demand increases or decreases based on investment rates, plus the greater the demand for our products, the more Canadian dollars needed to purchase them.
also arbitrage happens. this is when people speculate on currency, buying when it’s low and sellin when high.
High interest rates means more demand for investments

Question 4

Why doesn’t the gov like a depreciated dollar? does the bank of Canada like a high
or low values dollar?

Answer 4

imports are more expensive. when our dollar is low, we pay higher prices which means more inflation. this is why the bank of Canada doesn’t like a weak dollar.

Question 5

what does it mean “Canada has an open economy?”

Answer 5

it means a large portion of Canada’s GDP comes from import and exports.