Use diagrams of the Market for Loanable Funds and the Market for Foreign Currency to describe what would happen to the net capital outflow, the Canadian real exchange rate and net exports in each of the following scenarios:

Question

--- Instead of using diagrams it would be great if you can just explain what happens for each

1. Canadian citizens start saving more as a result of the introduction of Tax Free Savings Accounts

2. There is an increase in the perceived risk of holding Canadian assets. (10 marks)