Question 1

If fewer British tourists visit Niagara Falls,what is the effect in the foreign exchange market?

Accepted Answer

A) It will decrease the supply of British pounds. 
B) It will increase the demand for British pounds. 
C) It will decrease the demand for British pounds. 
D) It will increase the supply of British pounds. 
A) It will decrease the supply of British pounds. 
B) It will increase the demand for British pounds. 
C) It will decrease the demand for British pounds. 
D) It will increase the supply of British pounds.

Question 2

Which event would cause Sweden's currency to appreciate?

Accepted Answer

A) The demand for imports by Swedes increases. 
B) The demand for Sweden's exports increases. 
C) Real interest rates in Sweden decrease relative to the rest of the world. 
D) Sweden's inflation rate rises relative to inflation in the rest of the world. 
A) The demand for imports by Swedes increases. 
B) The demand for Sweden's exports increases. 
C) Real interest rates in Sweden decrease relative to the rest of the world. 
D) Sweden's inflation rate rises relative to inflation in the rest of the world.

Question 3

If the demand by foreigners for Canadian government bonds increases,other things equal,what will happen to the exchange rate for the Canadian dollar and the amount of Canadian exports?

Accepted Answer

A) It will decrease the exchange rate of the dollar and increase exports. 
B) It will decrease the exchange rate of the dollar and decrease exports. 
C) It will increase the exchange rate of the dollar and decrease exports. 
D) It will increase the exchange rate of the dollar and increase exports. 
A) It will decrease the exchange rate of the dollar and increase exports. 
B) It will decrease the exchange rate of the dollar and decrease exports. 
C) It will increase the exchange rate of the dollar and decrease exports. 
D) It will increase the exchange rate of the dollar and increase exports.

Question 4

Classify each of the following as debits or credits in the Canadian balance of payments.
A.Canadians buy chocolate from the Swiss.
B.Canada gives foreign aid to Bosnia.
C.British investors purchase Canadian government bonds.
D.Canadian tourists travel to Australia.
E.Volkswagen earns profits in Canada from its new cars.
F.Toyota builds a new plant in Ontario.
G.Shania Twain sells concert tickets in Sweden.
H.German consumers buy Ronco Vegematics made in Canada
I.Alcan earns profits in their Gladstone,Australia,facility.
J.Russian tourists travel to Canada.

Accepted Answer

C,F,G,H,and J are cr

Question 5

Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 10 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Accepted Answer

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

Question 6

Suppose a video craze in Canada makes a particular Japanese-produced video game very popular.What effect would this have?

Accepted Answer

A) It would tend to affect the Canadian balance of payments but not the balance of trade. 
B) It would tend to increase the balance of trade deficit of Canada. 
C) It would tend to increase the balance of trade surplus of Canada. 
D) It would tend to reduce any existing balance of trade deficit in Canada. 
A) It would tend to affect the Canadian balance of payments but not the balance of trade. 
B) It would tend to increase the balance of trade deficit of Canada. 
C) It would tend to increase the balance of trade surplus of Canada. 
D) It would tend to reduce any existing balance of trade deficit in Canada.

Question 7

If real interest rates in Canada rise relative to real interest rates in other countries,other things equal,what would likely occur?

Accepted Answer

A) The exchange rate of the dollar would increase relative to other currencies. 
B) There would be an indeterminate effect on the exchange rate of the dollar relative to other currencies. 
C) There would likely be no effect on the exchange rate of the dollar relative to other currencies. 
D) The exchange rate of the dollar would decline relative to other currencies. 
A) The exchange rate of the dollar would increase relative to other currencies. 
B) There would be an indeterminate effect on the exchange rate of the dollar relative to other currencies. 
C) There would likely be no effect on the exchange rate of the dollar relative to other currencies. 
D) The exchange rate of the dollar would decline relative to other currencies.

Question 8

What is a consequence of the Canadian dollar depreciating?

Accepted Answer

A) It rises in value. 
B) It takes fewer dollars to buy units of other currencies. 
C) Other currencies appreciate. 
D) It decreases in value within Canada. 
A) It rises in value. 
B) It takes fewer dollars to buy units of other currencies. 
C) Other currencies appreciate. 
D) It decreases in value within Canada.

Question 9

If a dollar is cheaper in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

Accepted Answer

A) There will be a shortage of dollars and upward pressure on the exchange rate. 
B) There will be a surplus of dollars and upward pressure on the exchange rate. 
C) There will be a surplus of dollars and downward pressure on the exchange rate. 
D) There will be a shortage of dollars and downward pressure on the exchange rate. 
A) There will be a shortage of dollars and upward pressure on the exchange rate. 
B) There will be a surplus of dollars and upward pressure on the exchange rate. 
C) There will be a surplus of dollars and downward pressure on the exchange rate. 
D) There will be a shortage of dollars and downward pressure on the exchange rate.

Question 10

If a British student pays her way to attend McGill University in Montreal,what impact will her actions have?

Accepted Answer

A) It will create a supply of pounds and a demand for dollars in the foreign currency market. 
B) It will cause the Canadian dollar to depreciate. 
C) It will cause the British pound to appreciate. 
D) It will create a supply of dollars and a demand for pounds in the foreign currency market. 
A) It will create a supply of pounds and a demand for dollars in the foreign currency market. 
B) It will cause the Canadian dollar to depreciate. 
C) It will cause the British pound to appreciate. 
D) It will create a supply of dollars and a demand for pounds in the foreign currency market.

Question 11

Which of the following would most likely cause a nation's currency to depreciate?

Accepted Answer

A) an increase in domestic real interest rates 
B) a balance-of-trade surplus 
C) an increase in the nation's inflation rate 
D) an increase in exports coupled with a decline in imports 
A) an increase in domestic real interest rates 
B) a balance-of-trade surplus 
C) an increase in the nation's inflation rate 
D) an increase in exports coupled with a decline in imports

Question 12

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

Accepted Answer

A) True 
 B)False

Question 13

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current floating exchange rate.

Accepted Answer

A) True 
 B)False

Question 14

What factors will shift the supply and demand for currency?

Accepted Answer

Any changes in tastes,income l

Question 15

If incomes increase in Canada,Canadians will buy more goods,including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for euros.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about the Canadian balance of trade is most accurate?

Accepted Answer

A) It is the difference between merchandise exports and merchandise imports. 
B) It is the same as the current account balance. 
C) It typically is negative since Canada imports far more goods than it exports. 
D) It includes net stock transactions. 
A) It is the difference between merchandise exports and merchandise imports. 
B) It is the same as the current account balance. 
C) It typically is negative since Canada imports far more goods than it exports. 
D) It includes net stock transactions.

Question 17

Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 6 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Accepted Answer

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

Question 18

Another term for the balance on the current account is the balance of trade.

Accepted Answer

A) True 
 B)False

Question 19

If,as the result of NAFTA,the U.S.demand for Canadian exports rises,the exchange rate of the Canadian dollar would tend to increase as a result.

Accepted Answer

A) True 
 B)False

Question 20

On March 16ᵗʰ,2012,the Canadian dollar was worth 0.7698 euros.Roughly how many Canadian dollars did it take to buy one euro?

Accepted Answer

A) 0.2302 
B) 0.7698 
C) 1.2990 
D) 1.4232 
A) 0.2302 
B) 0.7698 
C) 1.2990 
D) 1.4232

If fewer British tourists visit Niagara Falls,what is the effect in the foreign exchange market?

Which event would cause Sweden's currency to appreciate?

If the demand by foreigners for Canadian government bonds increases,other things equal,what will happen to the exchange rate for the Canadian dollar and the amount of Canadian exports?

Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 10 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Suppose a video craze in Canada makes a particular Japanese-produced video game very popular.What effect would this have?

If real interest rates in Canada rise relative to real interest rates in other countries,other things equal,what would likely occur?

What is a consequence of the Canadian dollar depreciating?

If a dollar is cheaper in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

If a British student pays her way to attend McGill University in Montreal,what impact will her actions have?

Which of the following would most likely cause a nation's currency to depreciate?

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current floating exchange rate.

What factors will shift the supply and demand for currency?

If incomes increase in Canada,Canadians will buy more goods,including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for euros.

Which of the following statements about the Canadian balance of trade is most accurate?

Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 6 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Another term for the balance on the current account is the balance of trade.

If,as the result of NAFTA,the U.S.demand for Canadian exports rises,the exchange rate of the Canadian dollar would tend to increase as a result.

On March 16ᵗʰ,2012,the Canadian dollar was worth 0.7698 euros.Roughly how many Canadian dollars did it take to buy one euro?

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 fewer British tourists visit Niagara Falls,what is the effect in the foreign exchange market?

Which event would cause Sweden's currency to appreciate?

If the demand by foreigners for Canadian government bonds increases,other things equal,what will happen to the exchange rate for the Canadian dollar and the amount of Canadian exports?

Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 10 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Suppose a video craze in Canada makes a particular Japanese-produced video game very popular.What effect would this have?

If real interest rates in Canada rise relative to real interest rates in other countries,other things equal,what would likely occur?

What is a consequence of the Canadian dollar depreciating?

If a dollar is cheaper in terms of a foreign currency than the equilibrium exchange rate,what will happen in the foreign exchange market?

If a British student pays her way to attend McGill University in Montreal,what impact will her actions have?

Which of the following would most likely cause a nation's currency to depreciate?

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current floating exchange rate.

What factors will shift the supply and demand for currency?

If incomes increase in Canada,Canadians will buy more goods,including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for euros.

Which of the following statements about the Canadian balance of trade is most accurate?

Suppose the exchange rate between Mexican pesos and Canadian dollars is 8 pesos per dollar.If the exchange rate goes to 6 pesos per dollar,what will happen to the exports of Canadian goods into Mexico?

Another term for the balance on the current account is the balance of trade.

If,as the result of NAFTA,the U.S.demand for Canadian exports rises,the exchange rate of the Canadian dollar would tend to increase as a result.

On March 16ᵗʰ,2012,the Canadian dollar was worth 0.7698 euros.Roughly how many Canadian dollars did it take to buy one euro?

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