33) Due to expansion and growth, an economy experiences an unemployment rate that is below the
level of the natural unemployment rate. Identify the likely effect of this level of unemployment on
the economy's inflation rate and interest rates, assuming all other factors remain constant.
34) If the Canadian Government takes action to increase its foreign debt through a new bond issue,
identify the effect this initiative would have on the Current Account and the Capital and Financial
35) Identify a factor that would cause a rise in cyclical unemployment.
Assume that the economy is moving towards the peak of an expansionary period. The
government passes legislation raising the minimum wage. Holding all other factors constant,
identify the correct statement regarding inflation and structural unemployment.
Inflation is likely falling and structural unemployment would decrease.
Inflation is likely falling and structural unemployment would increase.
Inflation is likely rising and structural unemployment would decrease.
Inflation is likely rising and structural unemployment would rise.
37) Assume that the prices of Canadian goods stay unchanged. Identify the impact a decline in the
value of the Canadian dollar would have on the volume of exports and imports.
38) The price level for most goods has fallen and the annual change in the Consumer Price Index
(CPI) has been negative over the past two years. Identify the type of inflation characterized by