Question 1

Excess demand for Canadian dollars in the FOREX market causes the Canadian dollar to depreciate.

Accepted Answer

A) True 
 B)False

Question 2

When Canadian real GDP increases, demand for Canadian dollars in the FOREX market increases.

Accepted Answer

A) True 
 B)False

Question 3

As the Canadian dollar strengthens, Canadian

Accepted Answer

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

Question 4

A strong Canadian dollar hurts importers.

Accepted Answer

A) True 
 B)False

Question 5

When there is a current account deficit there is a capital account deficit.

Accepted Answer

A) True 
 B)False

Question 6

Changes in expectations is the economic force that reinforces the effect of other forces on the value of the Canadian dollar.

Accepted Answer

A) True 
 B)False

Question 7

Canadians' supply of Canadian dollars is a demand for imports and assets from R.O.W.

Accepted Answer

A) True 
 B)False

Question 8

If the Canadian dollar exchanges for 0.90 U.S. dollars and also for 0.65 Euros, then a U.S. dollar exchanges for

Accepted Answer

A)  1.00 Euros. 
B)  1.55 Euros. 
C)  0.25 Euros. 
D)  1.39 Euros. 
E)  0.72 Euros. 
A)  1.00 Euros. 
B)  1.55 Euros. 
C)  0.25 Euros. 
D)  1.39 Euros. 
E)  0.72 Euros.

Question 9

If the interest rate in Japan is greater than the interest rate in Canada, rate of return parity suggests that

Accepted Answer

A)  the inflation rate is lower in Japan than in Canada. 
B)  Canadian financial assets are poor investments. 
C)  the yen is expected to depreciate against the Canadian dollar. 
D)  the yen is expected to appreciate against the Canadian dollar. 
E)  Japanese financial assets are poor investments. 
A)  the inflation rate is lower in Japan than in Canada. 
B)  Canadian financial assets are poor investments. 
C)  the yen is expected to depreciate against the Canadian dollar. 
D)  the yen is expected to appreciate against the Canadian dollar. 
E)  Japanese financial assets are poor investments.

Question 10

When Richard from New York buys a Government of Canada bond, the effect on the foreign exchange market is a

Accepted Answer

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

Question 11

Non-Canadians' demand for Canadian dollars is a demand for Canadian exports and assets.

Accepted Answer

A) True 
 B)False

Question 12

When Canadian interest rates fall the

Accepted Answer

A)  demand for Canadian dollars in the foreign exchange market increases. 
B)  Canadian inflation rate falls. 
C)  demand for Canadian exports decreases. 
D)  supply of Canadian dollars in the foreign exchange market decreases. 
E)  Canadian dollar depreciates. 
A)  demand for Canadian dollars in the foreign exchange market increases. 
B)  Canadian inflation rate falls. 
C)  demand for Canadian exports decreases. 
D)  supply of Canadian dollars in the foreign exchange market decreases. 
E)  Canadian dollar depreciates.

Question 13

When the Canadian dollar appreciates, the direct impact on inflation in Canada reinforces the indirect impact on inflation.

Accepted Answer

A) True 
 B)False

Question 14

The key to international transmission mechanisms is the impact of exchange rates on interest rates.

Accepted Answer

A) True 
 B)False

Question 15

When there is a current account deficit there is a capital account surplus.

Accepted Answer

A) True 
 B)False

Question 16

The Canadian dollar appreciates against the U.S. dollar if

Accepted Answer

A)  Canadian interest rates fall relative to U.S. interest rates. 
B)  U.S. interest rates rise relative to Canadian interest rates. 
C)  U.S. demand for Canadian exports decreases. 
D)  prices rise in the U.S. but remain constant in Canada. 
E)  speculators believe the Canadian dollar will depreciate in the future. 
A)  Canadian interest rates fall relative to U.S. interest rates. 
B)  U.S. interest rates rise relative to Canadian interest rates. 
C)  U.S. demand for Canadian exports decreases. 
D)  prices rise in the U.S. but remain constant in Canada. 
E)  speculators believe the Canadian dollar will depreciate in the future.

Question 17

China has purposefully fixed its exchange rate so that the yuan is undervalued relative to the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  US$ 1.25. 
B)  US$ 2.00. 
C)  US$ 2.50. 
D)  US$ 1.60. 
E)  US$ 0.80. 
A)  US$ 1.25. 
B)  US$ 2.00. 
C)  US$ 2.50. 
D)  US$ 1.60. 
E)  US$ 0.80.

Question 19

Changes in Canadian GDP is the economic force that reinforces the effect of other forces on the value of the Canadian dollar.

Accepted Answer

A) True 
 B)False

Question 20

Changes in Canadian GDP is the economic force that causes opposite effects on the value of the Canadian dollar.

Accepted Answer

A) True 
 B)False

Excess demand for Canadian dollars in the FOREX market causes the Canadian dollar to depreciate.

When Canadian real GDP increases, demand for Canadian dollars in the FOREX market increases.

As the Canadian dollar strengthens, Canadian

A strong Canadian dollar hurts importers.

When there is a current account deficit there is a capital account deficit.

Changes in expectations is the economic force that reinforces the effect of other forces on the value of the Canadian dollar.

Canadians' supply of Canadian dollars is a demand for imports and assets from R.O.W.

If the Canadian dollar exchanges for 0.90 U.S. dollars and also for 0.65 Euros, then a U.S. dollar exchanges for

If the interest rate in Japan is greater than the interest rate in Canada, rate of return parity suggests that

When Richard from New York buys a Government of Canada bond, the effect on the foreign exchange market is a

Non-Canadians' demand for Canadian dollars is a demand for Canadian exports and assets.

When Canadian interest rates fall the

When the Canadian dollar appreciates, the direct impact on inflation in Canada reinforces the indirect impact on inflation.

The key to international transmission mechanisms is the impact of exchange rates on interest rates.

When there is a current account deficit there is a capital account surplus.

The Canadian dollar appreciates against the U.S. dollar if

China has purposefully fixed its exchange rate so that the yuan is undervalued relative to the U.S. dollar.

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

Changes in Canadian GDP is the economic force that reinforces the effect of other forces on the value of the Canadian dollar.

Changes in Canadian GDP is the economic force that causes opposite effects on the value of the Canadian dollar.

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

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

Excess demand for Canadian dollars in the FOREX market causes the Canadian dollar to depreciate.

When Canadian real GDP increases, demand for Canadian dollars in the FOREX market increases.

As the Canadian dollar strengthens, Canadian

A strong Canadian dollar hurts importers.

When there is a current account deficit there is a capital account deficit.

Changes in expectations is the economic force that reinforces the effect of other forces on the value of the Canadian dollar.

Canadians' supply of Canadian dollars is a demand for imports and assets from R.O.W.

If the Canadian dollar exchanges for 0.90 U.S. dollars and also for 0.65 Euros, then a U.S. dollar exchanges for

If the interest rate in Japan is greater than the interest rate in Canada, rate of return parity suggests that

When Richard from New York buys a Government of Canada bond, the effect on the foreign exchange market is a

Non-Canadians' demand for Canadian dollars is a demand for Canadian exports and assets.

When Canadian interest rates fall the

When the Canadian dollar appreciates, the direct impact on inflation in Canada reinforces the indirect impact on inflation.

The key to international transmission mechanisms is the impact of exchange rates on interest rates.

When there is a current account deficit there is a capital account surplus.

The Canadian dollar appreciates against the U.S. dollar if

China has purposefully fixed its exchange rate so that the yuan is undervalued relative to the U.S. dollar.

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

Changes in Canadian GDP is the economic force that reinforces the effect of other forces on the value of the Canadian dollar.

Changes in Canadian GDP is the economic force that causes opposite effects on the value of the Canadian dollar.

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