Aa-dd diagrammatic analysis

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Reference no: EM1374585

A) Demonstrate how an increase in personal and federal income taxes ultimately affects Bank of Canada's balance sheet.

b) How are the Bank of Canada's transactions in the foreign exchange market from part (a) reflected in the balance of payments account?

c) Would the impact of the tax cut be larger or smaller under a floating exchange rate regime? Use the AA-DD diagrammatic analysis to answer this question.

Reference no: EM1374585

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