Question 1

If a Japanese pension fund decides to purchase Canadian government bonds,what is the effect in the exchange market?

Accepted Answer

A) It will increase the demand for Japanese yen. 
B) It will increase the supply of Japanese yen. 
C) It will decrease the supply of Japanese yen. 
D) It will decrease the demand for Japanese yen. 
A) It will increase the demand for Japanese yen. 
B) It will increase the supply of Japanese yen. 
C) It will decrease the supply of Japanese yen. 
D) It will decrease the demand for Japanese yen.

Question 2

What is a consequence of the Canadian dollar appreciating?

Accepted Answer

A) Other currencies also appreciate. 
B) It takes more dollars to buy units of other currencies. 
C) Other currencies depreciate. 
D) It increases in value within Canada. 
A) Other currencies also appreciate. 
B) It takes more dollars to buy units of other currencies. 
C) Other currencies depreciate. 
D) It increases in value within Canada.

Question 3

In foreign exchange markets,how is the demand for dollars determined?

Accepted Answer

A) by the level of Canadian imports and the demand for foreign assets by Canadian citizens and the Canadian government. 
B) solely by the level of Canadian merchandise imports 
C) by the level of Canadian exports and the demand for Canadian assets by foreigners 
D) solely by the level of Canadian merchandise exports 
A) by the level of Canadian imports and the demand for foreign assets by Canadian citizens and the Canadian government. 
B) solely by the level of Canadian merchandise imports 
C) by the level of Canadian exports and the demand for Canadian assets by foreigners 
D) solely by the level of Canadian merchandise exports

Question 4

If the exchange rate between euros and dollars is 2 euros per dollar,when a Canadian purchases a good valued at 80 euros,what is its cost in dollars?

Accepted Answer

A) $40 
B) $80 
C) $120 
D) $160 
A) $40 
B) $80 
C) $120 
D) $160

Question 5

If the rate of inflation in Canada rises relative to the rate of inflation in foreign nations,what will happen to the amount of Canadian net exports and subsequently the exchange rate for the Canadian dollar?

Accepted Answer

A) It will decrease net exports, which in turn will increase the value of the dollar. 
B) It will increase net exports, which in turn will increase the value of the dollar. 
C) It will decrease net exports, which in turn will decrease the value of the dollar. 
D) It will increase net exports, which in turn will decrease the value of the dollar. 
A) It will decrease net exports, which in turn will increase the value of the dollar. 
B) It will increase net exports, which in turn will increase the value of the dollar. 
C) It will decrease net exports, which in turn will decrease the value of the dollar. 
D) It will increase net exports, which in turn will decrease the value of the dollar.

Question 6

If the Canadian dollar depreciates relative to the Japanese yen,we would expect to happen in terms of trade between the two countries?

Accepted Answer

A) The Japanese imports from Canada would decrease. 
B) The Japanese trade deficit with Canada would decrease. 
C) The Japanese trade surplus with Canada would increase. 
D) The Japanese exports to Canada would decrease. 
A) The Japanese imports from Canada would decrease. 
B) The Japanese trade deficit with Canada would decrease. 
C) The Japanese trade surplus with Canada would increase. 
D) The Japanese exports to Canada would decrease.

Question 7

Which of the following examples would lead to a demand for euros?

Accepted Answer

A) Judy Potter, a Canadian, purchases a German automobile. 
B) Telus pays a dividend to its Dutch shareholders. 
C) Jim Potter, Judy's husband, sells French stocks. 
D) Fiat, an Italian carmaker, buys the Canadian assets of Chrysler. 
A) Judy Potter, a Canadian, purchases a German automobile. 
B) Telus pays a dividend to its Dutch shareholders. 
C) Jim Potter, Judy's husband, sells French stocks. 
D) Fiat, an Italian carmaker, buys the Canadian assets of Chrysler.

Question 8

Under what circumstances would a country tend to experience currency depreciation relative to other countries?

Accepted Answer

A) if people in the foreign currency markets expect the value of the currency will rise in the near future 
B) if its inflation rate is high relative to other countries. 
C) if the profitability of investments within the country increases relative to the rest of the world 
D) if the foreign demand for its exports increases 
A) if people in the foreign currency markets expect the value of the currency will rise in the near future 
B) if its inflation rate is high relative to other countries. 
C) if the profitability of investments within the country increases relative to the rest of the world 
D) if the foreign demand for its exports increases

Question 9

What is the expected result if the number of British pounds that exchange for a Canadian dollar falls on foreign currency markets?

Accepted Answer

A) The British will find it more difficult to export goods to Canada. 
B) The British will travel more to Canada. 
C) The British will find Canadian goods to be less expensive in their stores. 
D) The British will have an incentive to import fewer Canadian goods. 
A) The British will find it more difficult to export goods to Canada. 
B) The British will travel more to Canada. 
C) The British will find Canadian goods to be less expensive in their stores. 
D) The British will have an incentive to import fewer Canadian goods.

Question 10

What is the difference between the value of a country's merchandise exports and merchandise imports known as?

Accepted Answer

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

Question 11

If a Japanese pension fund decides to purchase Canadian government bonds,what is the effect in the exchange market?

Accepted Answer

A) It will decrease the supply of Canadian dollars. 
B) It will decrease the demand for Canadian dollars. 
C) It will increase the demand for Canadian dollars. 
D) It will increase the supply of Canadian dollars. 
A) It will decrease the supply of Canadian dollars. 
B) It will decrease the demand for Canadian dollars. 
C) It will increase the demand for Canadian dollars. 
D) It will increase the supply of Canadian dollars.

Question 12

If the Bank of Canada was to buy Canadian dollars on the foreign exchange market,what will the likely result be?

Accepted Answer

A) a rightward shift in the dollar supply curve 
B) at least a temporary increase in the exchange rate of the Canadian dollar 
C) a leftward shift in the dollar demand curve 
D) at least a temporary decline in the exchange rate of the Canadian dollar 
A) a rightward shift in the dollar supply curve 
B) at least a temporary increase in the exchange rate of the Canadian dollar 
C) a leftward shift in the dollar demand curve 
D) at least a temporary decline in the exchange rate of the Canadian dollar

Question 13

The dollar appreciates when Canadian demands for foreign currencies decrease.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would increase the demand for Canadian dollars in the foreign exchange market?

Accepted Answer

A) the sale of Canadian computer software to an American buyer 
B) the spending of Canadian tourists in France 
C) the purchase of Japanese automobiles by Canadian consumers 
D) the purchase of a Mexican shoe factory by a Canadian investor 
A) the sale of Canadian computer software to an American buyer 
B) the spending of Canadian tourists in France 
C) the purchase of Japanese automobiles by Canadian consumers 
D) the purchase of a Mexican shoe factory by a Canadian investor

Question 15

If your aunt in Italy lends you $5000 to complete your Canadian education,how will this be entered on the Canadian balance of payments account?

Accepted Answer

A) as a devaluation, since the net value of the Canadian capital stock will be reduced by the amount of your debt 
B) as a nonentry, affecting Italy's payments but not those of Canada 
C) as a debit (-) 
D) as a credit (+) 
A) as a devaluation, since the net value of the Canadian capital stock will be reduced by the amount of your debt 
B) as a nonentry, affecting Italy's payments but not those of Canada 
C) as a debit (-) 
D) as a credit (+)

Question 16

In recent years,Canada has run persistent surpluses in its balance on the current account.

Accepted Answer

A) True 
 B)False

Question 17

If the dollar appreciates relative to other currencies,how does the amount of the other currency necessary to buy a dollar change?

Accepted Answer

A) It takes less of the other currency to buy a dollar. 
B) There is not enough information to determine. 
C) There is no charge in the currency needed to buy a dollar. 
D) It takes more of the other currency to buy a dollar. 
A) It takes less of the other currency to buy a dollar. 
B) There is not enough information to determine. 
C) There is no charge in the currency needed to buy a dollar. 
D) It takes more of the other currency to buy a dollar.

Question 18

What is the term for an exchange rate that is partly determined by government intervention?

Accepted Answer

A) a government rate 
B) a dirty float 
C) a fixed rate 
D) an influenced float 
A) a government rate 
B) a dirty float 
C) a fixed rate 
D) an influenced float

Question 19

Under a flexible exchange rate system,what will a contractionary 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 20

What will happen to Canadian net exports and the subsequent value of the Canadian dollar if there is an increase in foreign demand for Canadian goods?

Accepted Answer

A) Net exports will increase and the Canadian dollar will appreciate. 
B) Net exports will decrease and the Canadian dollar will appreciate. 
C) Net exports will decrease and the Canadian dollar will depreciate. 
D) Net exports will increase and the Canadian dollar will depreciate. 
A) Net exports will increase and the Canadian dollar will appreciate. 
B) Net exports will decrease and the Canadian dollar will appreciate. 
C) Net exports will decrease and the Canadian dollar will depreciate. 
D) Net exports will increase and the Canadian dollar will depreciate.

If a Japanese pension fund decides to purchase Canadian government bonds,what is the effect in the exchange market?

What is a consequence of the Canadian dollar appreciating?

In foreign exchange markets,how is the demand for dollars determined?

If the exchange rate between euros and dollars is 2 euros per dollar,when a Canadian purchases a good valued at 80 euros,what is its cost in dollars?

If the rate of inflation in Canada rises relative to the rate of inflation in foreign nations,what will happen to the amount of Canadian net exports and subsequently the exchange rate for the Canadian dollar?

If the Canadian dollar depreciates relative to the Japanese yen,we would expect to happen in terms of trade between the two countries?

Which of the following examples would lead to a demand for euros?

Under what circumstances would a country tend to experience currency depreciation relative to other countries?

What is the expected result if the number of British pounds that exchange for a Canadian dollar falls on foreign currency markets?

What is the difference between the value of a country's merchandise exports and merchandise imports known as?

If a Japanese pension fund decides to purchase Canadian government bonds,what is the effect in the exchange market?

If the Bank of Canada was to buy Canadian dollars on the foreign exchange market,what will the likely result be?

The dollar appreciates when Canadian demands for foreign currencies decrease.

Which of the following would increase the demand for Canadian dollars in the foreign exchange market?

If your aunt in Italy lends you $5000 to complete your Canadian education,how will this be entered on the Canadian balance of payments account?

In recent years,Canada has run persistent surpluses in its balance on the current account.

If the dollar appreciates relative to other currencies,how does the amount of the other currency necessary to buy a dollar change?

What is the term for an exchange rate that is partly determined by government intervention?

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

What will happen to Canadian net exports and the subsequent value of the Canadian dollar if there is an increase in foreign demand for Canadian goods?

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 a Japanese pension fund decides to purchase Canadian government bonds,what is the effect in the exchange market?

What is a consequence of the Canadian dollar appreciating?

In foreign exchange markets,how is the demand for dollars determined?

If the exchange rate between euros and dollars is 2 euros per dollar,when a Canadian purchases a good valued at 80 euros,what is its cost in dollars?

If the rate of inflation in Canada rises relative to the rate of inflation in foreign nations,what will happen to the amount of Canadian net exports and subsequently the exchange rate for the Canadian dollar?

If the Canadian dollar depreciates relative to the Japanese yen,we would expect to happen in terms of trade between the two countries?

Which of the following examples would lead to a demand for euros?

Under what circumstances would a country tend to experience currency depreciation relative to other countries?

What is the expected result if the number of British pounds that exchange for a Canadian dollar falls on foreign currency markets?

What is the difference between the value of a country's merchandise exports and merchandise imports known as?

If a Japanese pension fund decides to purchase Canadian government bonds,what is the effect in the exchange market?

If the Bank of Canada was to buy Canadian dollars on the foreign exchange market,what will the likely result be?

The dollar appreciates when Canadian demands for foreign currencies decrease.

Which of the following would increase the demand for Canadian dollars in the foreign exchange market?

If your aunt in Italy lends you $5000 to complete your Canadian education,how will this be entered on the Canadian balance of payments account?

In recent years,Canada has run persistent surpluses in its balance on the current account.

If the dollar appreciates relative to other currencies,how does the amount of the other currency necessary to buy a dollar change?

What is the term for an exchange rate that is partly determined by government intervention?

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

What will happen to Canadian net exports and the subsequent value of the Canadian dollar if there is an increase in foreign demand for Canadian goods?

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