On the text Web site, examine (i) the behavior of the U.S.-Canada exchange rate over 2005-2007 and (ii) the interest rate targets chosen by the Bank of Canada over the same period.
a. Over 2005-2007, did the Bank of Canada respond to movements in the exchange rate in the manner described in the case study ?
b. Economists attribute changes in Canada's exchange rate over 2005-2007 to increases in the prices of commodities that Canada exports, including oil and metals. Does this help explain the answer to part (a)?