Macro- Practice Problems for Ch1

Macro- Practice Problems for Ch1 - Question 3: If the...

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Macroeconomics – Practice Exercises on Chapter 1 Questions 1: I would say that experience A reflects a more favorable macroeconomic environment. Because it is much better for an economy to be able to predict inflation rates. If you can’t, you are not likely to get foreign investment. Also it is difficult for businesses to determine what prices to put on their products if the real value of their goods keeps changing. It is also bad for savers when high inflation rates of 10% will depreciate the value of their money. Question 2: 1. How much is the inflation rate 2. Trustworthiness of the borrower, default risk 3. The term of the loan 4. (How else could I invest the money.)
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Unformatted text preview: Question 3: If the Canadian dollar appreciates, I as a consumer am better off because he value of my money is higher. Also imports are cheaper. As a Canadian manufacturer I am worse off if I want to export my good. But might be better off if people feel richer and buy more. Or better if need to import parts. Yes it matter what type of manufacturer you are, if you create parts, and other countries need to buy, you are worse off. Also the manufacturers of domestic goods that have to compete with foreign goods, are worse off because foreign goods are now cheaper. Questions 4: Inflation rate is -0.8. Huh?! Question 5:...
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