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

To understand the pluses and minuses on Canada's balance of payments accounts, focus on the flows of money into (positive) and out of (negative) Canada.

(True/False)

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Question 41

Suppose purchasing power parity (PPP) depends only on hotel rooms. The exchange rate is C$1.00 = US$0.80 and a room at the Weston Hotel in Niagara Falls, Ontario costs C$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, New York should be US$160.

(True/False)

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Question 42

When R.O.W demand for Canadian exports increases, demand for Canadian dollars in the FOREX market increases.

(True/False)

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Question 43

As the Canadian dollar weakens, Canadian

(Multiple Choice)

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Question 44

An appreciating Canadian dollar is a negative demand shock because

(Multiple Choice)

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Question 45

A financial account deficit means that R.O.W. invested more in Canada than Canadians invested in R.O.W.

(True/False)

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Question 46

Suppose purchasing power parity (PPP) depends only on hamburgers. The exchange rate is C$1.00 = US$0.80 and hamburger prices are US$2.00 in the U.S. PPP suggests that the price of a hamburger in Canada should be C$2.50.

(True/False)

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Question 47

When the price of Canadian exports to the rest of the world rise, the inflation rate rises in other countries.

(True/False)

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Question 48

The two main items on the current account are exports and imports.

(True/False)

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Question 49

A weak Canadian dollar hurts importers.

(True/False)

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Question 50

As the Canadian dollar strengthens, Canadian

(Multiple Choice)

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Question 51

Flows of Canadian dollars out of Canada are negative numbers on the balance of payments accounts.

(True/False)

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Question 52

The law of one price states that differences in prices of the same product across markets will be eliminated by the actions of profit-seekers.

(True/False)

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Question 53

Suppose purchasing power parity (PPP) depends only on hotel rooms. The exchange rate is C$1.00 = US$0.80 and a room at the Weston Hotel in Niagara Falls, New York costs US$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, Ontario should be C$250.

(True/False)

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Question 54

A depreciating Canadian dollar causes a(n)

(Multiple Choice)

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Question 55

Suppose purchasing power parity (PPP) depends only on hamburgers. The exchange rate is C$1.00 = US$0.80 and hamburger prices are C$1.80 in Canada and US$2.00 in the U.S. PPP suggests that the Canadian dollar is overvalued.

(True/False)

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Question 56

A hamburger costs C$4.50 in Fredericton, New Brunswick, and the exchange rate is 67 U.S. cents per Canadian dollar. Then the

(Multiple Choice)

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Question 57

Flows of Canadian dollars out of Canada are positive numbers on the balance of payments accounts.

(True/False)

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Question 58

The indirect effect on Canadian inflation of an exchange rate appreciation

(Multiple Choice)

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Question 59

The direct impact on Canadian inflation of an exchange rate appreciation occurs because

(Multiple Choice)

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Question 60

Showing 41 - 60 of 245

To understand the pluses and minuses on Canada's balance of payments accounts, focus on the flows of money into (positive) and out of (negative) Canada.

Suppose purchasing power parity (PPP) depends only on hotel rooms. The exchange rate is C$1.00 = US$0.80 and a room at the Weston Hotel in Niagara Falls, Ontario costs C$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, New York should be US$160.

When R.O.W demand for Canadian exports increases, demand for Canadian dollars in the FOREX market increases.

As the Canadian dollar weakens, Canadian

An appreciating Canadian dollar is a negative demand shock because

A financial account deficit means that R.O.W. invested more in Canada than Canadians invested in R.O.W.

Suppose purchasing power parity (PPP) depends only on hamburgers. The exchange rate is C$1.00 = US$0.80 and hamburger prices are US$2.00 in the U.S. PPP suggests that the price of a hamburger in Canada should be C$2.50.

When the price of Canadian exports to the rest of the world rise, the inflation rate rises in other countries.

The two main items on the current account are exports and imports.

A weak Canadian dollar hurts importers.

As the Canadian dollar strengthens, Canadian

Flows of Canadian dollars out of Canada are negative numbers on the balance of payments accounts.

The law of one price states that differences in prices of the same product across markets will be eliminated by the actions of profit-seekers.

Suppose purchasing power parity (PPP) depends only on hotel rooms. The exchange rate is C$1.00 = US$0.80 and a room at the Weston Hotel in Niagara Falls, New York costs US$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, Ontario should be C$250.

A depreciating Canadian dollar causes a(n)

Suppose purchasing power parity (PPP) depends only on hamburgers. The exchange rate is C$1.00 = US$0.80 and hamburger prices are C$1.80 in Canada and US$2.00 in the U.S. PPP suggests that the Canadian dollar is overvalued.

A hamburger costs C$4.50 in Fredericton, New Brunswick, and the exchange rate is 67 U.S. cents per Canadian dollar. Then the

Flows of Canadian dollars out of Canada are positive numbers on the balance of payments accounts.

The indirect effect on Canadian inflation of an exchange rate appreciation

The direct impact on Canadian inflation of an exchange rate appreciation occurs because

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