Question 1

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

Accepted Answer

A) There will be a shortage of dollars and downward pressure on the exchange rate. 
B) There will be a shortage of dollars and upward pressure on the exchange rate. 
C) There will be a surplus of dollars and downward pressure on the exchange rate. 
D) There will be a surplus of dollars and upward pressure on the exchange rate. 
A) There will be a shortage of dollars and downward pressure on the exchange rate. 
B) There will be a shortage of dollars and upward pressure on the exchange rate. 
C) There will be a surplus of dollars and downward pressure on the exchange rate. 
D) There will be a surplus of dollars and upward pressure on the exchange rate. C

Question 2

Suppose the exchange rate between the Japanese yen and the Canadian dollar is 130 yen to the dollar.If it then changes to 150 yen to the dollar,what will happen to the price of Canadian goods for Japanese importers?

Accepted Answer

A) It will change in an indeterminate direction. 
B) It will fall. 
C) It will rise. 
D) It will stay the same. 
A) It will change in an indeterminate direction. 
B) It will fall. 
C) It will rise. 
D) It will stay the same. C

Question 3

Suppose the dollar rises from 100 to 125 yen.What will result?

Accepted Answer

A) Exports to Japan will likely increase. 
B) Canadian consumers will more likely buy Japanese-made automobiles. 
C) Japanese tourists will more likely visit Canada. 
D) Canadian businesses will be less likely to use Japanese shipping lines to transport their products. 
A) Exports to Japan will likely increase. 
B) Canadian consumers will more likely buy Japanese-made automobiles. 
C) Japanese tourists will more likely visit Canada. 
D) Canadian businesses will be less likely to use Japanese shipping lines to transport their products. B

Question 4

Which of the following statements about the exchange rate is the most accurate?

Accepted Answer

A) It states the price of one currency in terms of another currency. 
B) It is closely related to the concept of absolute advantage. 
C) It is closely related to the concept of comparative advantage. 
D) It is the rate at which one country's money is flowing to a second country. 
A) It states the price of one currency in terms of another currency. 
B) It is closely related to the concept of absolute advantage. 
C) It is closely related to the concept of comparative advantage. 
D) It is the rate at which one country's money is flowing to a second country.

Question 5

If the value of a nation's merchandise exports exceeds merchandise imports,what is the nation running?

Accepted Answer

A) a merchandise trade deficit 
B) a balance of payments deficit 
C) a balance of payments surplus 
D) a merchandise trade surplus 
A) a merchandise trade deficit 
B) a balance of payments deficit 
C) a balance of payments surplus 
D) a merchandise trade surplus

Question 6

What must occur when goods or services cross international borders?

Accepted Answer

A) Money must generally move in the opposite direction. 
B) Payment must be made in another good, using barter. 
C) Countries must ship gold to make payment. 
D) A future shipment must be made to offset the current sale/purchase. 
A) Money must generally move in the opposite direction. 
B) Payment must be made in another good, using barter. 
C) Countries must ship gold to make payment. 
D) A future shipment must be made to offset the current sale/purchase.

Question 7

Which of the following is most likely to cause the depreciation of the Canadian dollar?

Accepted Answer

A) a German-owned company that buys Canadian oil 
B) a Canadian farmer who relies on exports 
C) a Canadian professor on extended vacation in Paris 
D) a German professor on vacation in Quebec 
A) a German-owned company that buys Canadian oil 
B) a Canadian farmer who relies on exports 
C) a Canadian professor on extended vacation in Paris 
D) a German professor on vacation in Quebec

Question 8

In foreign exchange markets,how is the supply of dollars determined?

Accepted Answer

A) solely by the level of Canadian merchandise imports 
B) by the level of Canadian imports and the demand for foreign assets by Canadian citizens and the Canadian government 
C) solely by the level of Canadian merchandise exports 
D) by the levels of Canadian merchandise exports and merchandise imports 
A) solely by the level of Canadian merchandise imports 
B) by the level of Canadian imports and the demand for foreign assets by Canadian citizens and the Canadian government 
C) solely by the level of Canadian merchandise exports 
D) by the levels of Canadian merchandise exports and merchandise imports

Question 9

What will happen to the supply of dollars,the demand for dollars,and the equilibrium exchange rate of the dollar in each of the following cases?
A.Canadians buy more European goods.
B.Europeans invest in the Canadian stock market.
C.European tourists flock to Canada
D.Europeans buy Canadian government bonds.
E.Canadian tourists flock to Europe.

Accepted Answer

A.The supply of dollars increases,the de

Question 10

The balance on goods and services is the same as the balance on the current account.

Accepted Answer

A) True 
 B)False

Question 11

Under a flexible exchange rate system,what can we conclude if a nation is running a deficit in its balance of merchandise trade?

Accepted Answer

A) The nation must be running a surplus in the nonmerchandise components of its transactions with other countries. 
B) The nation's currency will depreciate. 
C) The nation must be running a deficit in the nonmerchandise components of its transactions with other countries. 
D) The nation's currency will appreciate. 
A) The nation must be running a surplus in the nonmerchandise components of its transactions with other countries. 
B) The nation's currency will depreciate. 
C) The nation must be running a deficit in the nonmerchandise components of its transactions with other countries. 
D) The nation's currency will appreciate.

Question 12

If consumers in Europe and Asia develop strong preferences for Canadian goods,what impact will this have on Canada's current account?

Accepted Answer

A) It will not be affected since purchases of Canadian goods by foreigners are recorded in the capital account. 
B) It will not be affected since purchases of Canadian goods based on mere preferences are recorded under statistical discrepancy. 
C) It will move toward surplus, since purchases of Canadian goods are recorded as credits on our current account. 
D) It will move toward deficit, since purchases of Canadian goods by foreigners are counted as debits in our current account. 
A) It will not be affected since purchases of Canadian goods by foreigners are recorded in the capital account. 
B) It will not be affected since purchases of Canadian goods based on mere preferences are recorded under statistical discrepancy. 
C) It will move toward surplus, since purchases of Canadian goods are recorded as credits on our current account. 
D) It will move toward deficit, since purchases of Canadian goods by foreigners are counted as debits in our current account.

Question 13

On March 16ᵗʰ,2012,the Canadian dollar was worth 1.0087 U.S.dollars.How many Canadian dollars did it take to buy one U.S.dollar?

Accepted Answer

A) 0.9914 
B) 0.9987 
C) 1.0000 
D) 1.0087 
A) 0.9914 
B) 0.9987 
C) 1.0000 
D) 1.0087

Question 14

Since when have most of the industrialized world's currencies been under a flexible exchange system?

Accepted Answer

A) since 1986 
B) since 1981 
C) since 1973 
D) since 1969 
A) since 1986 
B) since 1981 
C) since 1973 
D) since 1969

Question 15

Which of the following would be a credit in the Canadian balance of payments?

Accepted Answer

A) a short-term loan extended to a South American country by the Canadian government 
B) the purchase of a German car by a Canadian 
C) a trip to Japan by a Canadian student 
D) the purchase of insurance from Lloyd's of London by a Canadian resident 
A) a short-term loan extended to a South American country by the Canadian government 
B) the purchase of a German car by a Canadian 
C) a trip to Japan by a Canadian student 
D) the purchase of insurance from Lloyd's of London by a Canadian resident

Question 16

Which of the following is a debit in the Canadian current account?

Accepted Answer

A) the purchase of insurance from Lloyd's of London by a Canadian 
B) the purchase of Canadian lumber by a German 
C) a trip to Canada by a Chinese student 
D) the purchase of the Eaton Centre by Japanese investors 
A) the purchase of insurance from Lloyd's of London by a Canadian 
B) the purchase of Canadian lumber by a German 
C) a trip to Canada by a Chinese student 
D) the purchase of the Eaton Centre by Japanese investors

Question 17

Is it possible for a currency to appreciate relative to another currency,and depreciate relative to a third?

Accepted Answer

A) Yes, this could occur under a strict gold standard. 
B) Yes, this is possible in a world of floating exchange rates. 
C) Yes, in theory, but it does not happen in reality. 
D) No, this is not theoretically possible; a currency rises or falls against all others. 
A) Yes, this could occur under a strict gold standard. 
B) Yes, this is possible in a world of floating exchange rates. 
C) Yes, in theory, but it does not happen in reality. 
D) No, this is not theoretically possible; a currency rises or falls against all others.

Question 18

If the exchange rate between yen and dollars is 120 yen per dollar,when a Canadian purchases a good valued at 600 yen,what is its cost in dollars?

Accepted Answer

A) $5 
B) $120 
C) $600 
D) $72 000 
A) $5 
B) $120 
C) $600 
D) $72 000

Question 19

Deflation in Canada would tend to make the exchange rate of the dollar depreciate.

Accepted Answer

A) True 
 B)False

Question 20

If the interest rates in two countries were the same,which country would you prefer to invest in the assets of?

Accepted Answer

A) the country whose currency had the greatest exchange rate 
B) the country whose currency was likely to appreciate 
C) the country whose currency was likely to depreciate 
D) the country whose currency had the lowest exchange rate 
A) the country whose currency had the greatest exchange rate 
B) the country whose currency was likely to appreciate 
C) the country whose currency was likely to depreciate 
D) the country whose currency had the lowest exchange rate

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

Suppose the exchange rate between the Japanese yen and the Canadian dollar is 130 yen to the dollar.If it then changes to 150 yen to the dollar,what will happen to the price of Canadian goods for Japanese importers?

Suppose the dollar rises from 100 to 125 yen.What will result?

Which of the following statements about the exchange rate is the most accurate?

If the value of a nation's merchandise exports exceeds merchandise imports,what is the nation running?

What must occur when goods or services cross international borders?

Which of the following is most likely to cause the depreciation of the Canadian dollar?

In foreign exchange markets,how is the supply of dollars determined?

The balance on goods and services is the same as the balance on the current account.

Under a flexible exchange rate system,what can we conclude if a nation is running a deficit in its balance of merchandise trade?

If consumers in Europe and Asia develop strong preferences for Canadian goods,what impact will this have on Canada's current account?

On March 16ᵗʰ,2012,the Canadian dollar was worth 1.0087 U.S.dollars.How many Canadian dollars did it take to buy one U.S.dollar?

Since when have most of the industrialized world's currencies been under a flexible exchange system?

Which of the following would be a credit in the Canadian balance of payments?

Which of the following is a debit in the Canadian current account?

Is it possible for a currency to appreciate relative to another currency,and depreciate relative to a third?

If the exchange rate between yen and dollars is 120 yen per dollar,when a Canadian purchases a good valued at 600 yen,what is its cost in dollars?

Deflation in Canada would tend to make the exchange rate of the dollar depreciate.

If the interest rates in two countries were the same,which country would you prefer to invest in the assets of?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

Filters

Exam 15: International Finance

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

Suppose the exchange rate between the Japanese yen and the Canadian dollar is 130 yen to the dollar.If it then changes to 150 yen to the dollar,what will happen to the price of Canadian goods for Japanese importers?

Suppose the dollar rises from 100 to 125 yen.What will result?

Which of the following statements about the exchange rate is the most accurate?

If the value of a nation's merchandise exports exceeds merchandise imports,what is the nation running?

What must occur when goods or services cross international borders?

Which of the following is most likely to cause the depreciation of the Canadian dollar?

In foreign exchange markets,how is the supply of dollars determined?

The balance on goods and services is the same as the balance on the current account.

Under a flexible exchange rate system,what can we conclude if a nation is running a deficit in its balance of merchandise trade?

If consumers in Europe and Asia develop strong preferences for Canadian goods,what impact will this have on Canada's current account?

On March 16ᵗʰ,2012,the Canadian dollar was worth 1.0087 U.S.dollars.How many Canadian dollars did it take to buy one U.S.dollar?

Since when have most of the industrialized world's currencies been under a flexible exchange system?

Which of the following would be a credit in the Canadian balance of payments?

Which of the following is a debit in the Canadian current account?

Is it possible for a currency to appreciate relative to another currency,and depreciate relative to a third?

If the exchange rate between yen and dollars is 120 yen per dollar,when a Canadian purchases a good valued at 600 yen,what is its cost in dollars?

Deflation in Canada would tend to make the exchange rate of the dollar depreciate.

If the interest rates in two countries were the same,which country would you prefer to invest in the assets of?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

Filters