Exam 34: Exchange Rates and the Balance of Payments

Consider the balance-of-payments accounting information for Lalaland in 2015 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero. TABLE 34-1 -Refer to Table 34-1.What is the net change in the stock of Lalalandʹs investments abroad in 2015?

A Canadian traveling to the United States converts $100 Canadian into 85 U.S.dollars.One month later he does the same thing and receives only 80 U.S.dollars.There are no transactions costs.The Canadian -U.S.exchange rate has ________ and the Canadian dollar has ________ relative to the U.S. dollar.

The diagram below shows supply and demand curves for bicycles in the domestic Canadian market.Assume that all bicycles are identical. FIGURE 33-4 -Refer to Figure 33-4.Suppose the world price of bicycles is $200 and Canada has in place a 50% tariff on this good.The deadweight loss to the Canadian economy resulting from this tariff is per year.

Consider Canadaʹs balance of payments.When a grocery importer in Sweden buys Quebec maple syrup,this transaction

Assume exchange rates are flexible.When the quality of one countryʹs products is improving more rapidly than the quality of the products produced in the rest of the world,there will be a tendency,ceteris paribus,for

An agreement among a group of countries to eliminate trade barriers among themselves,to present a common trading front to the rest of the world in terms of common tariffs,but which does not permit free movement of factors of production among member countries,is called a

Suppose a Canadian grocery chain imports one million kilograms of cheese from a Swiss exporter.Ceteris paribus,the effect is to

Consider Canadaʹs trade with the United States.Canadian exports to the U.S.,Americans travelling in Canada,and U.S.capital flows into Canada all give rise to

If a Canadian company builds and operates a mine in Indonesia,in the foreign -exchange market there will be a(n)

In 2014,Canada had a current account deficit of approximately $41 billion.In the absence of any statistical discrepancy,this deficit would imply that during that year,Canada

The diagram below shows the domestic demand and supply curves for cotton towels in Canada.The prevailing world price of cotton towels is PW.Assume that all cotton towels are identical. FIGURE 33-3 -Refer to Figure 33-3.If Canada imposes a tariff of $t per cotton towel,Canadian towel producersʹ revenues will be equal to the amount

A countryʹs balance of payments is sometimes incorrectly said to be ʺin deficit.ʺ This statement often refers to a situation where

With respect to Canadaʹs balance of payments,

Consider the market in which Canadian dollars are exchanged for British pounds.An increased preference of Canadian consumers for British goods would

The purchase of Canadian assets by foreigners is,for Canada,considered a capital

Canada and the United States have been in a prolonged dispute about Canadaʹs supply -managed agricultural industries,such as dairy and poultry.If the United States is successful in having Canadaʹs ʺtariff equivalentsʺ removed,who will lose and who will gain?

Suppose Canada eliminates a 15% tariff on foreign-made leather goods.There will be a in the Canadian price of leather goods,profits for domestic leather -goods producers,and in the deadweight loss associated with the tariff.

A fall in the Canadian-dollar price of foreign currency is referred to as

The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is P W.Assume that all jeans are identical. FIGURE 33-2 -Refer to Figure 33-2.Suppose Canada has free trade in jeans and then imposes a tariff of $ t per pair.Canadian consumers will lose consumer surplus equal to the area

Canadian governments (provincial and federal)currently provide enormous protection (through tariffs)to which of the following domestic industries?