Suppose a resident of Canada buys some machine tools from a company in Japan. Explain why and in what directions this changes Canada net exports and Canada net capital outflow.

Macroeconomic

Assignment 3 Questions: Chapter 15, 17 & 18

• What is the inflation tax, and how might it explain the creation of inflation by a central bank? (2.5 Marks)
• Suppose a resident of Canada buys some machine tools from a company in Japan. Explain why and in what directions this changes Canada net exports and Canada net capital outflow. (2.5 Marks)