1. Suppose Parliament decides to strip the Bank of Canada of its monetary policy powers and decides to legislate interest rate changes. a. How would

1. Suppose Parliament decides to strip the Bank of Canada of its monetary policy powers and decides to legislate interest rate changes.

a. How would you expect policy choices to change?

b. Which arrangement would be most likely to provide price stability?

2. Monetary policy:

a. How has its value behaved since 2000?

3. Tax cuts:

a. Explain what is meant by "tax cuts paying for themselves".

b. What would this statement imply about the tax multiplier?

c. In what circumstances would tax cuts pay for themselves? Can you think of any real life Canadian examples?