High dollar has a downside
http://www.montrealgazette.com/news/High+dollar+downside/4743387/story.html


Summary

Bank of Canada Governor Mark Carney said Friday that the high Canadian dollar has lessen a lot of the country's manufacturing competitiveness by raising costs of its exports in foreign markets. During an interview on CNBC, Carney said that our competitiveness in manufacturing has gone down a massive amount, versus the United States and third countries as well. He also says that the strong Canadian dollar created a disadvantage to growth and inflation in Canada. To add, our country was already being hit by supply-chain disruptions caused by the March 11 Japan earthquake. At this point, growth has been slowed quite noticeably in the second quarter. Canada's commodity-based economy has benefited from strong demand for oil and other important materials and has been a well evolved country amongst the other developed countries. Carney mentioned how the Canadian financial system was 'firing on all cylinders" which strengthened the Canadian economy because there were no credit restrictions on businesses seeking to borrow for expansion. Carney, who was en route to a Bank for International Settlements meeting in Switzerland, was asked if he expected to see some form of a transaction tax imposed on key global banks. He then said, that there will be an additional charge on the globally systemic important financial institutions.

Connections

The most recognizable form of money in Canada is paper currency. These are referred as legal tender which is exchanged for good and services. Which brings back to the topic of the increase in value for the Canadian dollar lessening a lot of the country's manufacturing competitiveness by raising costs of its exports in foreign markets. This also means that it would make the prices of our goods in other countries more expensive. This would decrease the amount of exports to countries versus the U.S. and other third countries. Which means the money supply in other countries would decrease due to the expensive imported goods from Canada it would decrease the purchases of goods and services made. In the textbook, the supply of money represents the amount of purchasing power available. The high dollar not only affects the money supply in other countries but also the Canada's manufacturing competitiveness and amount of production.
This article mentions about the impact that high dollar has on Canada's manufacturing, growth and inflation. However in connection to the textbook, I have also identified the impact it has on other countries.

Reflection

After making connections with the textbook to the article, I discovered other impacts the high dollar has other than on Canada. My first thought was that the most impact would affect us citizens when purchasing goods and services. However, it affects mainly other countries such as the U.S. and other third countries. Especially when it comes down to exporting, the high dollar raised the costs of exports in other countries. It also affects the growth and inflation in Canada. I'm guessing it affect the growth of Canada when it comes to the competitiveness in manufacturing going down a tremendous amount against other countries which in return, is a reduction in production. I make surprised to discover the affects a simple increase in dollar value has on Canada and how it affects other areas of the economy.