Question 1

An excess supply of Canadian dollars in the foreign exchange market causes the Canadian dollar to

Accepted Answer

A)  depreciate, increasing imports. 
B)  depreciate, decreasing exports. 
C)  appreciate, increasing exports. 
D)  appreciate, decreasing exports. 
E)  depreciate, increasing exports. 
A)  depreciate, increasing imports. 
B)  depreciate, decreasing exports. 
C)  appreciate, increasing exports. 
D)  appreciate, decreasing exports. 
E)  depreciate, increasing exports.

Question 2

A rise in the exchange rate is called a currency depreciation.

Accepted Answer

A) True 
 B)False

Question 3

When the Canadian money supply increases, the

Accepted Answer

A)  demand for Canadian dollars decreases. 
B)  supply of Canadian dollars decreases. 
C)  Canadian dollar appreciates in value. 
D)  Canadian interest rates rise. 
E)  velocity of money decreases. 
A)  demand for Canadian dollars decreases. 
B)  supply of Canadian dollars decreases. 
C)  Canadian dollar appreciates in value. 
D)  Canadian interest rates rise. 
E)  velocity of money decreases.

Question 4

Suppose Canada has a zero balance (no surplus or deficit) on the both the current account and on the capital account. Then Canadian businesses export new snow blowing machinery to Italy, which Italy finances by borrowing from a Canadian bank. On Canada's balance of payments accounts there is now a current account

Accepted Answer

A)  surplus and a financial account surplus. 
B)  surplus and a financial account deficit. 
C)  deficit and a financial account surplus. 
D)  deficit and a financial account deficit. 
E)  surplus and a financial account balance of zero. 
A)  surplus and a financial account surplus. 
B)  surplus and a financial account deficit. 
C)  deficit and a financial account surplus. 
D)  deficit and a financial account deficit. 
E)  surplus and a financial account balance of zero.

Question 5

A depreciating Canadian dollar causes a

Accepted Answer

A)  negative supply shock. 
B)  positive supply shock. 
C)  positive demand shock. 
D)  negative demand shock. 
E)  stagflation. 
A)  negative supply shock. 
B)  positive supply shock. 
C)  positive demand shock. 
D)  negative demand shock. 
E)  stagflation.

Question 6

The direct impact on Canadian inflation of an exchange rate depreciation occurs because higher prices of imports to Canada are inflationary.

Accepted Answer

A) True 
 B)False

Question 7

According to the law of supply for Canadian dollars, as the exchange rate

Accepted Answer

A)  rises, the quantity supplied of Canadian dollars increases. 
B)  rises, the supply curve of Canadian dollars shifts rightward. 
C)  falls, the quantity supplied of Canadian dollars increases. 
D)  falls, the supply curve of Canadian dollars shifts rightward. 
E)  rises or falls, none of above are true. 
A)  rises, the quantity supplied of Canadian dollars increases. 
B)  rises, the supply curve of Canadian dollars shifts rightward. 
C)  falls, the quantity supplied of Canadian dollars increases. 
D)  falls, the supply curve of Canadian dollars shifts rightward. 
E)  rises or falls, none of above are true.

Question 8

When R.O.W. demand for Canadian exports decreases, the

Accepted Answer

A)  Canadian dollar is not affected. 
B)  demand curve for Canadian dollars shifts rightward. 
C)  supply curve of Canadian dollars shifts leftward. 
D)  Canadian dollar appreciates. 
E)  Canadian dollar depreciates. 
A)  Canadian dollar is not affected. 
B)  demand curve for Canadian dollars shifts rightward. 
C)  supply curve of Canadian dollars shifts leftward. 
D)  Canadian dollar appreciates. 
E)  Canadian dollar depreciates.

Question 9

Most countries today have fixed exchange rates.

Accepted Answer

A) True 
 B)False

Question 10

Which activity is a positive entry on the Canadian current account?

Accepted Answer

A)  A Canadian tourist spends $2,000 at the SXSW Festival in Austin, Texas. 
B)  A U.S. tourist spends $3,000 at the Toronto International Film Festival. 
C)  A Canadian buys a German government bond. 
D)  A Canadian from Halifax invests in a hockey stick factory in Saskatchewan. 
E)  A French investor buys a winery in the Okanagan Valley in British Columbia. 
A)  A Canadian tourist spends $2,000 at the SXSW Festival in Austin, Texas. 
B)  A U.S. tourist spends $3,000 at the Toronto International Film Festival. 
C)  A Canadian buys a German government bond. 
D)  A Canadian from Halifax invests in a hockey stick factory in Saskatchewan. 
E)  A French investor buys a winery in the Okanagan Valley in British Columbia.

Question 11

A weak Canadian dollar hurts exporters.

Accepted Answer

A) True 
 B)False

Question 12

A big wheat harvest that results in record Canadian export sales increases the demand for Canadian dollars in the foreign exchange market.

Accepted Answer

A) True 
 B)False

Question 13

Which statements are true? A lower value of the Canadian dollar makes:
1) R.O.W. imports and assets more expensive for Canadians.
2) R.O.W. imports and assets less expensive for Canadians.
3) Canadian exports and assets more expensive for non-Canadians.
4) Canadian exports and assets less expensive for non-Canadians.

Accepted Answer

A)  1 and 3 
B)  1 and 4 
C)  2 and 3 
D)  2 and 4 
E)  1 only 
A)  1 and 3 
B)  1 and 4 
C)  2 and 3 
D)  2 and 4 
E)  1 only

Question 14

If the rate of return in India is higher than the rate of return in Canada, rate of return parity suggests the difference is due to

Accepted Answer

A)  expected interest rates. 
B)  expected exchange rates. 
C)  current interest rates. 
D)  current exchange rates. 
E)  purchasing power parity. 
A)  expected interest rates. 
B)  expected exchange rates. 
C)  current interest rates. 
D)  current exchange rates. 
E)  purchasing power parity.

Question 15

An increase in the world price of oil causes the Canadian dollar to appreciate.

Accepted Answer

A) True 
 B)False

Question 16

When most speculators expect the Canadian dollar to appreciate, they increase the demand for our currency in the FOREX market so, the Canadian dollar appreciates.

Accepted Answer

A) True 
 B)False

Question 17

A current account surplus means

Accepted Answer

A)  Canadian spending on imports from R.O.W. is greater than R.O.W. spending on Canadian exports. 
B)  R.O.W. spending on Canadian exports is greater than Canadian spending on imports from R.O.W. 
C)  Canadian investments in R.O.W. are greater than R.O.W. investments in Canada. 
D)  R.O.W. investments in Canada are greater than Canadian investments in R.O.W. 
E)  there is also a capital account surplus. 
A)  Canadian spending on imports from R.O.W. is greater than R.O.W. spending on Canadian exports. 
B)  R.O.W. spending on Canadian exports is greater than Canadian spending on imports from R.O.W. 
C)  Canadian investments in R.O.W. are greater than R.O.W. investments in Canada. 
D)  R.O.W. investments in Canada are greater than Canadian investments in R.O.W. 
E)  there is also a capital account surplus.

Question 18

As the Canadian dollar strengthens, Canadian

Accepted Answer

A)  real GDP increases. 
B)  inflation decreases. 
C)  exports increase. 
D)  imports decrease. 
E)  unemployment decreases. 
A)  real GDP increases. 
B)  inflation decreases. 
C)  exports increase. 
D)  imports decrease. 
E)  unemployment decreases.

Question 19

The main items on the

Accepted Answer

A)  financial account are Canadian investments in R.O.W. and R.O.W. investments in Canada. 
B)  current account are exports and Canadian investments in R.O.W. 
C)  current account are imports and R.O.W. investments in Canada. 
D)  financial account are exports and Canadian investments in R.O.W 
E)  financial account are imports and R.O.W. investments in Canada. 
A)  financial account are Canadian investments in R.O.W. and R.O.W. investments in Canada. 
B)  current account are exports and Canadian investments in R.O.W. 
C)  current account are imports and R.O.W. investments in Canada. 
D)  financial account are exports and Canadian investments in R.O.W 
E)  financial account are imports and R.O.W. investments in Canada.

Question 20

What increases the demand for Canadian dollars in the foreign exchange market?

Accepted Answer

A)  An increase in demand for imports from R.O.W. by Canadians. 
B)  A decrease in demand for Canadian exports by non-Canadians. 
C)  The Canadian dollar is expected to appreciate next year. 
D)  U.S. interest rates rise. 
E)  The Canadian dollar is expected to depreciate next year. 
A)  An increase in demand for imports from R.O.W. by Canadians. 
B)  A decrease in demand for Canadian exports by non-Canadians. 
C)  The Canadian dollar is expected to appreciate next year. 
D)  U.S. interest rates rise. 
E)  The Canadian dollar is expected to depreciate next year.

An excess supply of Canadian dollars in the foreign exchange market causes the Canadian dollar to

A rise in the exchange rate is called a currency depreciation.

When the Canadian money supply increases, the

A depreciating Canadian dollar causes a

The direct impact on Canadian inflation of an exchange rate depreciation occurs because higher prices of imports to Canada are inflationary.

According to the law of supply for Canadian dollars, as the exchange rate

When R.O.W. demand for Canadian exports decreases, the

Most countries today have fixed exchange rates.

Which activity is a positive entry on the Canadian current account?

A weak Canadian dollar hurts exporters.

A big wheat harvest that results in record Canadian export sales increases the demand for Canadian dollars in the foreign exchange market.

If the rate of return in India is higher than the rate of return in Canada, rate of return parity suggests the difference is due to

An increase in the world price of oil causes the Canadian dollar to appreciate.

When most speculators expect the Canadian dollar to appreciate, they increase the demand for our currency in the FOREX market so, the Canadian dollar appreciates.

A current account surplus means

As the Canadian dollar strengthens, Canadian

The main items on the

What increases the demand for Canadian dollars in the foreign exchange market?

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters

Exam 10: Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

An excess supply of Canadian dollars in the foreign exchange market causes the Canadian dollar to

A rise in the exchange rate is called a currency depreciation.

When the Canadian money supply increases, the

A depreciating Canadian dollar causes a

The direct impact on Canadian inflation of an exchange rate depreciation occurs because higher prices of imports to Canada are inflationary.

According to the law of supply for Canadian dollars, as the exchange rate

When R.O.W. demand for Canadian exports decreases, the

Most countries today have fixed exchange rates.

Which activity is a positive entry on the Canadian current account?

A weak Canadian dollar hurts exporters.

A big wheat harvest that results in record Canadian export sales increases the demand for Canadian dollars in the foreign exchange market.

If the rate of return in India is higher than the rate of return in Canada, rate of return parity suggests the difference is due to

An increase in the world price of oil causes the Canadian dollar to appreciate.

When most speculators expect the Canadian dollar to appreciate, they increase the demand for our currency in the FOREX market so, the Canadian dollar appreciates.

A current account surplus means

As the Canadian dollar strengthens, Canadian

The main items on the

What increases the demand for Canadian dollars in the foreign exchange market?

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters