Question 1

If real interest rates in Canada rose and real interest rates in England fell,we would expect people to:

Accepted Answer

A) buy relatively more Canadian assets 
B) increase their demand for British pounds 
C) borrow more from Canadian sources 
D) buy relatively more British assets 
A) buy relatively more Canadian assets 
B) increase their demand for British pounds 
C) borrow more from Canadian sources 
D) buy relatively more British assets

Question 2

What effect would a depreciation in the Canadian dollar have?

Accepted Answer

A) It would discourage foreign consumers from buying Canadian goods. 
B) It would reduce the number of dollars it would take to buy a Swiss franc. 
C) It would encourage foreigners to buy more Canadian goods. 
D) It would discourage foreigners from making investments in Canada. 
A) It would discourage foreign consumers from buying Canadian goods. 
B) It would reduce the number of dollars it would take to buy a Swiss franc. 
C) It would encourage foreigners to buy more Canadian goods. 
D) It would discourage foreigners from making investments in Canada.

Question 3

All exports of Canadian goods are considered credit items in the Canadian balance of payments.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would cause a decrease in the exchange rate of the Canadian dollar?

Accepted Answer

A) a decrease in the amount of foreign debt purchased by Canadian citizens 
B) an increase in Canadian imports 
C) an increase in demand by foreigners to buy Canadian government securities 
D) an increase in Canadian exports 
A) a decrease in the amount of foreign debt purchased by Canadian citizens 
B) an increase in Canadian imports 
C) an increase in demand by foreigners to buy Canadian government securities 
D) an increase in Canadian exports

Question 5

Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the imports of British goods into Canada?

Accepted Answer

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

Question 6

What does the statement,"at any given moment there is one exchange rate," refer to?

Accepted Answer

A) There is one exchange rate for all the world's currencies. 
B) There is one exchange rate for currencies in the free world. 
C) There is one exchange rate established by the Bank of Canada. 
D) There is one exchange rate between every pair of currencies. 
A) There is one exchange rate for all the world's currencies. 
B) There is one exchange rate for currencies in the free world. 
C) There is one exchange rate established by the Bank of Canada. 
D) There is one exchange rate between every pair of currencies.

Question 7

Differences among nations in real economic growth rates,real interest rates,and inflation rates will each affect the exchange rates among their currencies.

Accepted Answer

A) True 
 B)False

Question 8

Any force that shifts either the demand for or supply of a currency will shift the equilibrium in the foreign exchange market,leading to a new exchange rate.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

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

Question 10

Under a fixed exchange rate system,what will an expansionary fiscal policy lead to?

Accepted Answer

A) a depreciation of the domestic currency 
B) an appreciation of the domestic currency 
C) an increase in foreign reserves 
D) a decrease in foreign reserves 
A) a depreciation of the domestic currency 
B) an appreciation of the domestic currency 
C) an increase in foreign reserves 
D) a decrease in foreign reserves

Question 11

Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the price of Canadian goods for British importers?

Accepted Answer

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

Question 12

Under a fixed exchange rate system,what will an expansionary monetary policy lead to?

Accepted Answer

A) an increase in foreign reserves 
B) a depreciation of the domestic currency 
C) a decrease in foreign reserves 
D) an appreciation of the domestic currency 
A) an increase in foreign reserves 
B) a depreciation of the domestic currency 
C) a decrease in foreign reserves 
D) an appreciation of the domestic currency

Question 13

Under a dirty float system,if governments believe that their currency is undervalued or falling too fast,which action might they take?

Accepted Answer

A) use foreign reserves to buy their currency off the exchange market 
B) reduce short-term interest rates 
C) sell some of their currency in exchange markets 
D) raise short-term interest rates 
A) use foreign reserves to buy their currency off the exchange market 
B) reduce short-term interest rates 
C) sell some of their currency in exchange markets 
D) raise short-term interest rates

Question 14

Under a flexible exchange rate system,what will an expansionary fiscal policy lead to?

Accepted Answer

A) an increase in foreign reserves 
B) a decrease in foreign reserves 
C) a depreciation of the domestic currency 
D) an appreciation of the domestic currency 
A) an increase in foreign reserves 
B) a decrease in foreign reserves 
C) a depreciation of the domestic currency 
D) an appreciation of the domestic currency

Question 15

If Canada experiences a sharp increase in exports,what will happen to demand for the Canadian dollar?

Accepted Answer

A) It will be unchanged. 
B) It will increase. 
C) It will decrease. 
D) It will change at the same rate as the supply of dollars will change. 
A) It will be unchanged. 
B) It will increase. 
C) It will decrease. 
D) It will change at the same rate as the supply of dollars will change.

Question 16

What is the term for the record of all transactions with foreign nations that involve the exchange of merchandise goods and services or unilateral gifts?

Accepted Answer

A) current account 
B) balance of payments 
C) balance of trade 
D) capital account 
A) current account 
B) balance of payments 
C) balance of trade 
D) capital account

Question 17

Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.70 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Accepted Answer

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

Question 18

Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.50 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Accepted Answer

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

Question 19

Under a pure flexible exchange rate system,what does the rate that equates demand and supply in the exchange rate market imply?

Accepted Answer

A) The capital account balance equals zero. 
B) Merchandise exports equals merchandise imports. 
C) The current and capital account balances will be equal in magnitude, but opposite in sign. 
D) The current account balance equals zero. 
A) The capital account balance equals zero. 
B) Merchandise exports equals merchandise imports. 
C) The current and capital account balances will be equal in magnitude, but opposite in sign. 
D) The current account balance equals zero.

Question 20

Stock in a German corporation can be purchased directly with currency from any other country.

Accepted Answer

A) True 
 B)False

If real interest rates in Canada rose and real interest rates in England fell,we would expect people to:

What effect would a depreciation in the Canadian dollar have?

All exports of Canadian goods are considered credit items in the Canadian balance of payments.

Which of the following would cause a decrease in the exchange rate of the Canadian dollar?

Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the imports of British goods into Canada?

What does the statement,"at any given moment there is one exchange rate," refer to?

Differences among nations in real economic growth rates,real interest rates,and inflation rates will each affect the exchange rates among their currencies.

Any force that shifts either the demand for or supply of a currency will shift the equilibrium in the foreign exchange market,leading to a new exchange rate.

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

Under a fixed exchange rate system,what will an expansionary fiscal policy lead to?

Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the price of Canadian goods for British importers?

Under a fixed exchange rate system,what will an expansionary monetary policy lead to?

Under a dirty float system,if governments believe that their currency is undervalued or falling too fast,which action might they take?

Under a flexible exchange rate system,what will an expansionary fiscal policy lead to?

If Canada experiences a sharp increase in exports,what will happen to demand for the Canadian dollar?

What is the term for the record of all transactions with foreign nations that involve the exchange of merchandise goods and services or unilateral gifts?

Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.70 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.50 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Under a pure flexible exchange rate system,what does the rate that equates demand and supply in the exchange rate market imply?

Stock in a German corporation can be purchased directly with currency from any other country.

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 real interest rates in Canada rose and real interest rates in England fell,we would expect people to:

What effect would a depreciation in the Canadian dollar have?

All exports of Canadian goods are considered credit items in the Canadian balance of payments.

Which of the following would cause a decrease in the exchange rate of the Canadian dollar?

Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the imports of British goods into Canada?

What does the statement,"at any given moment there is one exchange rate," refer to?

Differences among nations in real economic growth rates,real interest rates,and inflation rates will each affect the exchange rates among their currencies.

Any force that shifts either the demand for or supply of a currency will shift the equilibrium in the foreign exchange market,leading to a new exchange rate.

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

Under a fixed exchange rate system,what will an expansionary fiscal policy lead to?

Suppose the exchange rate between British pounds and Canadian dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound,what will happen to the price of Canadian goods for British importers?

Under a fixed exchange rate system,what will an expansionary monetary policy lead to?

Under a dirty float system,if governments believe that their currency is undervalued or falling too fast,which action might they take?

Under a flexible exchange rate system,what will an expansionary fiscal policy lead to?

If Canada experiences a sharp increase in exports,what will happen to demand for the Canadian dollar?

What is the term for the record of all transactions with foreign nations that involve the exchange of merchandise goods and services or unilateral gifts?

Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.70 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Suppose the exchange rate between Canadian dollars and U.S.dollars is $0.60 U.S.dollars per Canadian dollar.If the exchange rate goes to $0.50 U.S.dollars per Canadian dollar,what will happen to the exports of American goods into Canada?

Under a pure flexible exchange rate system,what does the rate that equates demand and supply in the exchange rate market imply?

Stock in a German corporation can be purchased directly with currency from any other country.

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