Question 1

Canadian exports are positive numbers on Canada's balance of payments accounts.

Accepted Answer

A) True 
 B)False

Question 2

Changes in world prices for Canadian resource exports is the economic force that causes opposite effects on the value of the Canadian dollar.

Accepted Answer

A) True 
 B)False

Question 3

If the rate of return is 3 percent in Mexico and 1 percent in Canada, the

Accepted Answer

A)  law of one price predicts a single international rate of return between 3 percent and 1 percent. 
B)  Mexican peso is expected to depreciate against the Canadian dollar by 2 percent. 
C)  Mexican peso is expected to appreciate against the Canadian dollar by 2 percent. 
D)  rate of return in Mexico is expected to fall to 1 percent. 
E)  rate of return in Canada is expected to rise to 3 percent. 
A)  law of one price predicts a single international rate of return between 3 percent and 1 percent. 
B)  Mexican peso is expected to depreciate against the Canadian dollar by 2 percent. 
C)  Mexican peso is expected to appreciate against the Canadian dollar by 2 percent. 
D)  rate of return in Mexico is expected to fall to 1 percent. 
E)  rate of return in Canada is expected to rise to 3 percent.

Question 4

The main items on the

Accepted Answer

A)  current account are exports and imports. 
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)  current account are exports and imports. 
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 5

Imports into Canada are negative numbers on Canada's balance of payments accounts.

Accepted Answer

A) True 
 B)False

Question 6

A decrease in Canadian interest rates relative to other countries causes the Canadian dollar to appreciate.

Accepted Answer

A) True 
 B)False

Question 7

When Michael from Ontario buys hockey tickets in Michigan to watch the Maple Leafs crush the Red Wings, the effect on the foreign exchange market is a

Accepted Answer

A)  rightward shift of the supply curve of U.S. dollars. 
B)  rightward shift of the demand curve for Canadian dollars. 
C)  rightward shift of the supply curve of Canadian dollars. 
D)  leftward shift of the supply curve of U.S. dollars. 
E)  leftward shift of the demand curve for U.S. dollars. 
A)  rightward shift of the supply curve of U.S. dollars. 
B)  rightward shift of the demand curve for Canadian dollars. 
C)  rightward shift of the supply curve of Canadian dollars. 
D)  leftward shift of the supply curve of U.S. dollars. 
E)  leftward shift of the demand curve for U.S. dollars.

Question 8

When the Canadian dollar depreciates, the direct effect on Canadian inflation always reinforces the indirect effect.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  rises, the quantity demanded of Canadian dollars decreases. 
B)  rises, the demand for Canadian dollars decreases. 
C)  falls, the quantity demanded of Canadian dollars decreases. 
D)  falls, the demand for Canadian dollars decreases. 
E)  rises or falls, none of above are true. 
A)  rises, the quantity demanded of Canadian dollars decreases. 
B)  rises, the demand for Canadian dollars decreases. 
C)  falls, the quantity demanded of Canadian dollars decreases. 
D)  falls, the demand for Canadian dollars decreases. 
E)  rises or falls, none of above are true.

Question 10

Which statement best describes how rate of return parity happens?

Accepted Answer

A)  The expected depreciation of the Canadian dollar is currently lowering demand for it. 
B)  The price of apples is the same in Canada and the U.S., adjusting for the exchange rate. 
C)  The market feeling is that the Canadian dollar is overvalued and will likely appreciate. 
D)  The recent high Canadian interest rate has decreased the supply of Canadian dollars. 
E)  None of the above. 
A)  The expected depreciation of the Canadian dollar is currently lowering demand for it. 
B)  The price of apples is the same in Canada and the U.S., adjusting for the exchange rate. 
C)  The market feeling is that the Canadian dollar is overvalued and will likely appreciate. 
D)  The recent high Canadian interest rate has decreased the supply of Canadian dollars. 
E)  None of the above.

Question 11

When most currency speculators expect the Canadian dollar to depreciate, the

Accepted Answer

A)  Canadian dollar depreciates. 
B)  Canadian dollar appreciates. 
C)  demand curve for Canadian dollars shifts rightward. 
D)  supply curve of Canadian dollars shifts leftward. 
E)  Canadian interest rate differential increases. 
A)  Canadian dollar depreciates. 
B)  Canadian dollar appreciates. 
C)  demand curve for Canadian dollars shifts rightward. 
D)  supply curve of Canadian dollars shifts leftward. 
E)  Canadian interest rate differential increases.

Question 12

An increase in Canadian interest rates relative to other countries causes the Canadian dollar to appreciate.

Accepted Answer

A) True 
 B)False

Question 13

When there is a shortage of Canadian dollars in the foreign exchange market,

Accepted Answer

A)  competition among sellers raises the exchange rate. 
B)  competition among buyers raises the exchange rate. 
C)  competition among sellers lowers the exchange rate. 
D)  competition among buyers lowers the exchange rate. 
E)  cooperation between buyers and sellers lowers the exchange rate. 
A)  competition among sellers raises the exchange rate. 
B)  competition among buyers raises the exchange rate. 
C)  competition among sellers lowers the exchange rate. 
D)  competition among buyers lowers the exchange rate. 
E)  cooperation between buyers and sellers lowers the exchange rate.

Question 14

The purchasing power parity exchange rate is the best rate for the Canadian macroeconomic outcomes of full employment, stable prices, and steady economic growth.

Accepted Answer

A) True 
 B)False

Question 15

When most currency speculators expect the Canadian dollar to appreciate, the

Accepted Answer

A)  demand for Canadian dollars decreases. 
B)  supply of Canadian dollars increases. 
C)  demand for Canadian dollars increases. 
D)  demand for Canadian dollars does not change. 
E)  supply of Canadian dollars does not change. 
A)  demand for Canadian dollars decreases. 
B)  supply of Canadian dollars increases. 
C)  demand for Canadian dollars increases. 
D)  demand for Canadian dollars does not change. 
E)  supply of Canadian dollars does not change.

Question 16

As the Canadian dollar weakens, Canadian

Accepted Answer

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

Question 17

When most currency speculators expect the Canadian dollar to appreciate, the

Accepted Answer

A)  demand curve for Canadian dollars shifts leftward. 
B)  supply curve of Canadian dollars shifts rightward. 
C)  demand curve for Canadian dollars shifts rightward. 
D)  demand curve for Canadian dollars does not shift. 
E)  supply curve of Canadian dollars does not shift. 
A)  demand curve for Canadian dollars shifts leftward. 
B)  supply curve of Canadian dollars shifts rightward. 
C)  demand curve for Canadian dollars shifts rightward. 
D)  demand curve for Canadian dollars does not shift. 
E)  supply curve of Canadian dollars does not shift.

Question 18

The exchange rate between the Canadian dollar and the British pound is 0.5 pounds per dollar. If a radio sells for 38 pounds in Britain, what is the dollar price of the radio?

Accepted Answer

A)  $19 
B)  $25 
C)  $38 
D)  $57 
E)  $76 
A)  $19 
B)  $25 
C)  $38 
D)  $57 
E)  $76

Question 19

Which statements are true? A higher 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)  2 only 
A)  1 and 3 
B)  1 and 4 
C)  2 and 3 
D)  2 and 4 
E)  2 only

Question 20

With rate of return parity, money flows to where rates of return are lowest.

Accepted Answer

A) True 
 B)False

Canadian exports are positive numbers on Canada's balance of payments accounts.

Changes in world prices for Canadian resource exports is the economic force that causes opposite effects on the value of the Canadian dollar.

If the rate of return is 3 percent in Mexico and 1 percent in Canada, the

The main items on the

Imports into Canada are negative numbers on Canada's balance of payments accounts.

A decrease in Canadian interest rates relative to other countries causes the Canadian dollar to appreciate.

When Michael from Ontario buys hockey tickets in Michigan to watch the Maple Leafs crush the Red Wings, the effect on the foreign exchange market is a

When the Canadian dollar depreciates, the direct effect on Canadian inflation always reinforces the indirect effect.

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

Which statement best describes how rate of return parity happens?

When most currency speculators expect the Canadian dollar to depreciate, the

An increase in Canadian interest rates relative to other countries causes the Canadian dollar to appreciate.

When there is a shortage of Canadian dollars in the foreign exchange market,

The purchasing power parity exchange rate is the best rate for the Canadian macroeconomic outcomes of full employment, stable prices, and steady economic growth.

When most currency speculators expect the Canadian dollar to appreciate, the

As the Canadian dollar weakens, Canadian

When most currency speculators expect the Canadian dollar to appreciate, the

The exchange rate between the Canadian dollar and the British pound is 0.5 pounds per dollar. If a radio sells for 38 pounds in Britain, what is the dollar price of the radio?

With rate of return parity, money flows to where rates of return are lowest.

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

Canadian exports are positive numbers on Canada's balance of payments accounts.

Changes in world prices for Canadian resource exports is the economic force that causes opposite effects on the value of the Canadian dollar.

If the rate of return is 3 percent in Mexico and 1 percent in Canada, the

The main items on the

Imports into Canada are negative numbers on Canada's balance of payments accounts.

A decrease in Canadian interest rates relative to other countries causes the Canadian dollar to appreciate.

When Michael from Ontario buys hockey tickets in Michigan to watch the Maple Leafs crush the Red Wings, the effect on the foreign exchange market is a

When the Canadian dollar depreciates, the direct effect on Canadian inflation always reinforces the indirect effect.

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

Which statement best describes how rate of return parity happens?

When most currency speculators expect the Canadian dollar to depreciate, the

An increase in Canadian interest rates relative to other countries causes the Canadian dollar to appreciate.

When there is a shortage of Canadian dollars in the foreign exchange market,

The purchasing power parity exchange rate is the best rate for the Canadian macroeconomic outcomes of full employment, stable prices, and steady economic growth.

When most currency speculators expect the Canadian dollar to appreciate, the

As the Canadian dollar weakens, Canadian

When most currency speculators expect the Canadian dollar to appreciate, the

The exchange rate between the Canadian dollar and the British pound is 0.5 pounds per dollar. If a radio sells for 38 pounds in Britain, what is the dollar price of the radio?

With rate of return parity, money flows to where rates of return are lowest.

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