Exam 18: Part B: The Balance of Payments and Exchange Rates

Explain how the exchange rate gets determined in a flexible exchange rate system.

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Question 21

What happens in the foreign exchange market when there is a Canadian export transaction?

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Question 22

What is meant by currency appreciation?

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Question 23

Explain how a nation might persistently import more goods than it exports and still maintain equilibrium in its balance of payments.

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Question 24

In the table below are the supply and demand schedules for Russian roubles. (a) What will be the rate of exchange for the Russian rouble and for the Canadian dollar? (b) What would happen if the Canadian and Russian governments wanted to use currency intervention to fix or "peg" the price of a rouble at $0.60?

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Question 25

What is the official settlement account and how is it used in the balance of payments?

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Question 26

Describe the three major disadvantages of flexible exchange rates.

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Question 27

What were the Current Account Balance, the Capital Account Balance, and the Official Settlement Accounts Balance in Canada for the year 2016? Use Table 18-1.

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Question 28

How does a fixed exchange rate system work? How can a nation maintain its fixed exchange rate?

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Question 29

What is the difference between a fixed exchange rate system and a flexible (floating) exchange rate system?

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Question 30

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Exam 18: Part B: The Balance of Payments and Exchange Rates

Explain how the exchange rate gets determined in a flexible exchange rate system.

What happens in the foreign exchange market when there is a Canadian export transaction?

What is meant by currency appreciation?

Explain how a nation might persistently import more goods than it exports and still maintain equilibrium in its balance of payments.

What is the official settlement account and how is it used in the balance of payments?

Describe the three major disadvantages of flexible exchange rates.

What were the Current Account Balance, the Capital Account Balance, and the Official Settlement Accounts Balance in Canada for the year 2016? Use Table 18-1.

How does a fixed exchange rate system work? How can a nation maintain its fixed exchange rate?

What is the difference between a fixed exchange rate system and a flexible (floating) exchange rate system?

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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