This assignment is for Module 10 and covers Chapter 30 from the text. Students should answer all questions. All questions
are of equal value.
Question 1
You may want to review Chapter 23, loanable funds market before attempting question 1.
a) Define real economic investment.
b) Explain the relationship between changes in interest rates and the quantity of real economic investment.
c) Explain why a predictable rate of inflation makes real interest rates more predictable.
d) Explain why unpredictable real interest rates hamper real economic investment.
Question 2
Explain and use an AS/AD diagram and a demand/supply diagram for the Canadian dollar to illustrate how the Bank of Canada
can eliminate a recessionary gap with monetary policy. Note in the AS/AD diagram you do not need to draw the multiplied
(AD +/- ∆E) aggregate demand curve. Be sure to address the impact of monetary policy on all components of AD except for
G.
Question 3
Explain and use an AS/AD diagram and a demand/supply diagram for the Canadian dollar to illustrate how the Bank of Canada
can eliminate an inflationary gap with monetary policy. Note in the AS/AD diagram you do not need to draw the multiplied
(AD +/- ∆E) aggregate demand curve. Be sure to address the impact of monetary policy on all components of AD except for
G.
Question 4
Use the internet to find a brief article that connects recent Canadian monetary policy to either question one or two
above. Cut and paste the article into your assignment (cite the source) and be sure to explain how the article relates to
this assignment.
Place this order with us and get 18% discount now! to earn your discount enter this code: special18 If you need assistance chat with us now by clicking the live chat button.