Question 1

What is the meaning of the balance of goods and services? &#160;&#10;A)&#160;The balance of goods and services is the same as the merchandise trade balance, because services CANNOT be traded.&#160;&#10;B)&#160;The balance of goods and services is equivalent to the trade balance.&#160;&#10;C)&#160;The balance of goods and services is the value of all goods and services exported minus the value of all goods and services imported.&#160;&#10;D)&#160;The balance of goods and services is the value of all tangible products exported minus the value of all tangible products imported.

Accepted Answer

The balance of goods and services is calculated by subtracting the value of all goods and services imported from the value of all goods and services exported. It takes into account both tangible products (goods) and intangible products (services), making it different from the merchandise trade balance that only considers tangible products. Therefore, option C is the best choice. Options A and D are incorrect because they limit the scope to only goods, ignoring the importance of services in international trade. Option B is incorrect because it only considers tangible products, leaving out the value of intangible products such as services.

Question 2

When does a nation have an unfavourable balance of trade? &#160;&#10;A)&#160;when the nation has a surplus in its balance of payments&#160;&#10;B)&#160;when the nation has a deficit in its balance of payments&#160;&#10;C)&#160;when the value of the nation's imports of goods is greater than the value of its exports of goods&#160;&#10;D)&#160;when the nation's current account is in surplus and its capital account is in deficit

Accepted Answer

An unfavourable balance of trade occurs when a nation's imports of goods exceed the value of its exports of goods, leading to a trade deficit. This situation indicates that the country is buying more from other countries than it is selling to them.

Question 3

Which of the following is NOT included in the merchandise trade balance? &#160;&#10;A)&#160;exports of refrigerators&#160;&#10;B)&#160;imports of automobiles&#160;&#10;C)&#160;exports of agricultural products&#160;&#10;D)&#160;shipping and insurance costs

Accepted Answer

Shipping and insurance costs are not included in the merchandise trade balance, as it only refers to the value of goods that are imported and exported. Shipping and insurance costs fall under the category of "services trade."

Question 4

Which term refers to Canadian investment earnings from foreign assets minus foreigners' earnings from their Canadian assets? &#160;&#10;A)&#160;the merchandise trade balance&#160;&#10;B)&#160;the unilateral transfers abroad&#160;&#10;C)&#160;the balance on good and services&#160;&#10;D)&#160;net investment from abroad

Accepted Answer

This term refers to the net investment earnings from abroad, which is calculated by subtracting earnings of foreigners from their Canadian assets from Canadian investment earnings from foreign assets. The merchandise trade balance refers to the difference between a country's exports and imports, while unilateral transfers abroad refer to payments or gifts made by a country to another country without expecting anything in return. The balance on goods and services refers to the difference between a country's exports and imports of goods and services.

Question 5

What does the current account reflect? &#160;&#10;A)&#160;trade in tangible products&#160;&#10;B)&#160;trade in goods as well as services&#160;&#10;C)&#160;the purchase of securities from foreigners&#160;&#10;D)&#160;the sale of securities to foreigners

Accepted Answer

The current account reflects both trade in goods and services, which includes the export and import of tangible products as well as services such as travel, transportation, and royalties. The purchase or sale of securities from or to foreigners is recorded in the capital account, which is separate from the current account.

Question 6

What does the merchandise trade balance measure? &#160;&#10;A)&#160;the value of goods and services exported&#160;&#10;B)&#160;the value of all goods and services exported minus the value of all goods and services imported&#160;&#10;C)&#160;the value of all goods and services exported minus the value of all goods and services imported, and transactions to finance the difference&#160;&#10;D)&#160;the value of all tangible products exported minus the value of all tangible products imported

Accepted Answer

The merchandise trade balance specifically measures the difference between the value of tangible products (goods) exported and the value of tangible products imported, excluding services.

Question 7

With which region did Canada have the largest trade surplus in 2013? &#160;&#10;A)&#160;the European Union&#160;&#10;B)&#160;the United Kingdom&#160;&#10;C)&#160;the United States&#160;&#10;D)&#160;Japan

Accepted Answer

According to data from Statistics Canada, Canada had a trade surplus of $28.9 billion with the United States in 2013, the largest surplus with any region.

Question 8

Which of the following is NOT classified as a service in the current account? &#160;&#10;A)&#160;transportation&#160;&#10;B)&#160;insurance&#160;&#10;C)&#160;tourist expenditures&#160;&#10;D)&#160;unilateral transfers

Accepted Answer

Transportation, insurance, and tourist expenditures are all services that are included in the current account of the balance of payments. Unilateral transfers, however, represent transfers of money or resources between countries with no expectation of receiving anything in return, and are classified separately as part of the capital account.

Question 9

&#10;Refer to the table in the exhibit.What is the balance on current account? &#160;&#10;A)&#160;-$2,500&#160;&#10;B)&#160;-$2,420&#160;&#10;C)&#160;-$2,400&#160;&#10;D)&#160;-$2,000

Accepted Answer

The balance on the current account is calculated by summing up the trade balance, net income from abroad, and net current transfers. The correct balance is -$2,400 based on the given data.

Question 10

Which of the following describes Canadian merchandise trade balance from 2008 to 2014? &#160;&#10;A)&#160;The trade balance was always in surplus.&#160;&#10;B)&#160;The trade balance was always in deficit.&#160;&#10;C)&#160;The trade balance was sometimes in surplus and sometimes in deficit.&#160;&#10;D)&#160;The trade balance was always equal.

Accepted Answer

The answer of Which of the following describes Canadian merchandise...

Question 11

Which of the following describes Canadian merchandise trade balance from 1981 to 2007? &#160;&#10;A)&#160;The trade balance was always in surplus.&#160;&#10;B)&#160;The trade balance was always in deficit.&#160;&#10;C)&#160;The trade balance was sometimes in surplus and sometimes in deficit.&#160;&#10;D)&#160;The trade balance was always equal.

Accepted Answer

The answer of Which of the following describes Canadian merchandise...

Question 12

Which of the following characterizes the meaning of the merchandise trade balance? &#160;&#10;A)&#160;It reflects trade in intangibles like insurance and tourism.&#160;&#10;B)&#160;It records the flow of financial assets like stocks and bonds.&#160;&#10;C)&#160;It equals the value of imports minus the value of exports.&#160;&#10;D)&#160;It equals the value of tangible products exported minus the value of tangible products imported.

Accepted Answer

The answer of Which of the following characterizes the meaning...

Question 13

What does a nation's merchandise trade balance reflect? &#160;&#10;A)&#160;trade in tangible products&#160;&#10;B)&#160;value of exports&#160;&#10;C)&#160;value of imports&#160;&#10;D)&#160;trade in intangible products

Accepted Answer

The answer of What does a nation's merchandise trade balance...

Question 14

How is the value of a country's exports listed in its balance of payments account? &#160;&#10;A)&#160;as a credit&#160;&#10;B)&#160;as a debit&#160;&#10;C)&#160;as a payment&#160;&#10;D)&#160;as an investment

Accepted Answer

The answer of How is the value of a country's...

Question 15

Which of the following events would NOT be recorded in the Canadian balance of payments? &#160;&#10;A)&#160;The money supply of a foreign nation increases.&#160;&#10;B)&#160;A Quaker relief agency sends food to drought victims in sub-Saharan Africa.&#160;&#10;C)&#160;The Ministry of Defense stations troops in Afghanistan.&#160;&#10;D)&#160;Pepsi-Cola sends its soft drink to Russia. In return, the United States gets Stolichnaya vodka. No money changes hands.

Accepted Answer

The answer of Which of the following events would NOT...

Question 16

Which of the following sets of transactions does the balance of payments summarize during a given time period? &#160;&#10;A)&#160;transactions between the government of one country and the government of another country&#160;&#10;B)&#160;transactions between the national government and local governments in the same country&#160;&#10;C)&#160;transactions among individuals, firms, and government of one country, and transactions among individuals, firms, and governments throughout the rest of the world&#160;&#10;D)&#160;transactions among individuals, firms, and governments of two countries

Accepted Answer

The answer of Which of the following sets of transactions...

Question 17

What does the current account record? &#160;&#10;A)&#160;last year's flows of funds into and out of the country&#160;&#10;B)&#160;flows of imports and exports of goods and services, net income earned by Canadian residents from foreign assets, and net transfer payments&#160;&#10;C)&#160;only flows of imports and exports of goods&#160;&#10;D)&#160;only net income earned by Canadian residents from foreign assets

Accepted Answer

The answer of What does the current account record? &#160;&#10;A)&#160;last...

Question 18

Which of the following is NOT a unilateral transfer? &#160;&#10;A)&#160;income earned from foreign investments&#160;&#10;B)&#160;foreign aid&#160;&#10;C)&#160;personal gifts to friends or family abroad&#160;&#10;D)&#160;institutional charitable donations

Accepted Answer

The answer of Which of the following is NOT a...

Question 19

What types of imports are included in the debit side of the current account? &#160;&#10;A)&#160;goods only&#160;&#10;B)&#160;goods and services&#160;&#10;C)&#160;services only&#160;&#10;D)&#160;services and resources only

Accepted Answer

The answer of What types of imports are included in...

Question 20

How is the trade balance calculated? &#160;&#10;A)&#160;the services balance + the current account balance + the capital account balance&#160;&#10;B)&#160;merchandise exports -&#160;merchandise imports&#160;&#10;C)&#160;the current account balance + the capital account balance&#160;&#10;D)&#160;foreign purchases of domestic assets -&#160;domestic purchases of foreign assets

Accepted Answer

The answer of How is the trade balance calculated? &#160;&#10;A)&#160;the...

Question 21

Which of the following characterizes Canada in terms of its financial account? &#160;&#10;A)&#160;It is a net capital exporter.&#160;&#10;B)&#160;It is the world's largest debtor nation.&#160;&#10;C)&#160;It is a net capital importer.&#160;&#10;D)&#160;It is has an equal balance.

Accepted Answer

The answer of Which of the following characterizes Canada in...

Question 22

What does the financial account keep track of? &#160;&#10;A)&#160;the amount of foreign-owned machinery in a country&#160;&#10;B)&#160;the amount of domestically owned machinery in foreign countries&#160;&#10;C)&#160;the amount of exports and imports of goods and services&#160;&#10;D)&#160;the amount of assets in one country owned by citizens of another country

Accepted Answer

The answer of What does the financial account keep track...

Question 23

A wealthy Japanese executive decides to buy a large amount of Canadian assets.Which account under balance of payments would be affected? &#160;&#10;A)&#160;the Canadian current account&#160;&#10;B)&#160;the Canadian financial account&#160;&#10;C)&#160;the Canadian foreign reserves account&#160;&#10;D)&#160;the Canadian exports account

Accepted Answer

The answer of A wealthy Japanese executive decides to buy...

Question 24

In the balance of payments accounts, what does it mean when a nation is a net importer of capital? &#160;&#10;A)&#160;that the nation sells more goods in foreign countries than it buys from them&#160;&#10;B)&#160;that the nation buys more goods from foreign countries than it sells to them&#160;&#10;C)&#160;that the nation sells more assets to individuals in other countries than the nation buys from other countries&#160;&#10;D)&#160;that the nation buys more assets from individuals in other countries than the nations sells to other countries

Accepted Answer

The answer of In the balance of payments accounts, what...

Question 25

Which of the following characterizes the meaning of the financial account? &#160;&#10;A)&#160;The financial account records exports and imports of goods and services.&#160;&#10;B)&#160;The financial account records international transactions involving purchases and sales of investments.&#160;&#10;C)&#160;The financial account refers only to the export of real capital.&#160;&#10;D)&#160;The financial account measures the results of net investment income.

Accepted Answer

The answer of Which of the following characterizes the meaning...

Question 26

Which of the following components of the Canadian balance of payments includes direct investment by Canadians in foreign securities? &#160;&#10;A)&#160;official reserve assets&#160;&#10;B)&#160;the financial account&#160;&#10;C)&#160;the current account&#160;&#10;D)&#160;the merchandise trade account

Accepted Answer

The answer of Which of the following components of the...

Question 27

What was the net unilateral transfers abroad per Canadian resident in 2013? &#160;&#10;A)&#160;about $1250 per Canadian resident&#160;&#10;B)&#160;about $540 per Canadian resident&#160;&#10;C)&#160;about $150 per Canadian resident&#160;&#10;D)&#160;about $90 per Canadian resident

Accepted Answer

The answer of What was the net unilateral transfers abroad...

Question 28

What would cause a country to run a deficit in its current account? &#160;&#10;A)&#160;if exports exceed imports&#160;&#10;B)&#160;if imports exceed exports&#160;&#10;C)&#160;if foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and make unilateral transfers&#160;&#10;D)&#160;if foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and make unilateral transfers

Accepted Answer

The answer of What would cause a country to run...

Question 29

Which of the following is NOT a unilateral transfer? &#160;&#10;A)&#160;foreign aid from one government to another&#160;&#10;B)&#160;income earned from foreign investments&#160;&#10;C)&#160;personal gifts to friends in foreign countries&#160;&#10;D)&#160;donations to foreign countries from nongovernment domestic charities

Accepted Answer

The answer of Which of the following is NOT a...

Question 30

Which of the following is NOT a reason foreign investors would want to purchase Canadian assets? &#160;&#10;A)&#160;because the rate of return is higher in Canada than in many other countries&#160;&#10;B)&#160;because they may wish to diversify their foreign portfolios&#160;&#10;C)&#160;because Canada may be regarded as a relatively safer place for foreigners to make investments&#160;&#10;D)&#160;because governments of most other industrialized countries actively discourage foreign investment

Accepted Answer

The answer of Which of the following is NOT a...

Question 31

Suppose foreigners increase their ownership of Canadian assets.What would this help to offset? &#160;&#10;A)&#160;a deficit in the Canadian current account&#160;&#10;B)&#160;a deficit in the Canadian financial account&#160;&#10;C)&#160;a surplus in the Canadian current account&#160;&#10;D)&#160;a surplus in the Canadian financial account

Accepted Answer

The answer of Suppose foreigners increase their ownership of Canadian...

Question 32

By the end of 2012 foreigners owned about how much more of the Canadian economy than Canadians owned of other economies? &#160;&#10;A)&#160;$100 billion&#160;&#10;B)&#160;$250 billion&#160;&#10;C)&#160;$300 billion&#160;&#10;D)&#160;$500 billion

Accepted Answer

The answer of By the end of 2012 foreigners owned...

Question 33

Canada is a net importer of capital.What does this mean? &#160;&#10;A)&#160;that Canadian citizens own more foreign assets compared to foreigners who own Canadian assets&#160;&#10;B)&#160;that citizens of other countries are buying more Canadian assets than Canadian citizens are buying foreign assets&#160;&#10;C)&#160;that only Canadian citizens own foreign assets&#160;&#10;D)&#160;that only foreign citizens own Canadian assets

Accepted Answer

The answer of Canada is a net importer of capital.What...

Question 34

When a Canadian buys a Swedish financial asset, which of the following accounts is directly affected? &#160;&#10;A)&#160;Canada's merchandise trade balance&#160;&#10;B)&#160;Canada's goods and services balance&#160;&#10;C)&#160;Canada's financial account balance&#160;&#10;D)&#160;Canada's current account balance

Accepted Answer

The answer of When a Canadian buys a Swedish financial...

Question 35

Which of the following events would contribute, directly or indirectly, to a deficit in the financial account of the Canadian balance of payments? &#160;&#10;A)&#160;A British citizen buys stock in Ford of Canada.&#160;&#10;B)&#160;A British citizen buys a bond from Ford of Canada.&#160;&#10;C)&#160;Interest rates fall in Canada relative to the level of interest rates in the rest of the world.&#160;&#10;D)&#160;Australian publisher Rupert Murdoch buys Canadian newspapers companies.

Accepted Answer

The answer of Which of the following events would contribute,...

Question 36

What is the value of the statistical discrepancy in the balance of payments? &#160;&#10;A)&#160;It is always positive.&#160;&#10;B)&#160;It is always negative.&#160;&#10;C)&#160;It is always zero.&#160;&#10;D)&#160;It could be either positive, negative, or zero.

Accepted Answer

The answer of What is the value of the statistical...

Question 37

What is the term for the result of net unilateral transfers being added to the net exports of goods and services and net investment income from abroad? &#160;&#10;A)&#160;official reserve transactions account&#160;&#10;B)&#160;balance of payments&#160;&#10;C)&#160;balance on financial account&#160;&#10;D)&#160;balance on current account

Accepted Answer

The answer of What is the term for the result...

Question 38

When is a balance of payments account out of balance? &#160;&#10;A)&#160;only when exports are greater than imports&#160;&#10;B)&#160;only when imports are greater than exports&#160;&#10;C)&#160;when exports are greater than imports or when exports are less than imports&#160;&#10;D)&#160;never

Accepted Answer

The answer of When is a balance of payments account...

Question 39

Which of the following must a net importer of assets have? &#160;&#10;A)&#160;a current account deficit&#160;&#10;B)&#160;a financial account deficit&#160;&#10;C)&#160;a current account surplus&#160;&#10;D)&#160;a financial account surplus

Accepted Answer

The answer of Which of the following must a net...

Question 40

Under which of the following circumstances would Utopia be a debtor nation? &#160;&#10;A)&#160;if consumers in other countries bought goods and services from Utopia&#160;&#10;B)&#160;only if Utopia has a deficit in its current account&#160;&#10;C)&#160;only if Utopia has a deficit in its balance of goods and services&#160;&#10;D)&#160;if Utopia has a deficit in its balance of trade

Accepted Answer

The answer of Under which of the following circumstances would...

Question 41

Suppose the exchange rate changes from 75 cents per &#8364;1to $1 per &#8364;1.What has happened to the euro? &#160;&#10;A)&#160;It has appreciated, because its value has increased.&#160;&#10;B)&#160;It has appreciated, because the price of Canadian dollars has increased.&#160;&#10;C)&#160;It has depreciated, because its value has declined.&#160;&#10;D)&#160;It has depreciated, because its value has increased.

Accepted Answer

The answer of Suppose the exchange rate changes from 75...

Question 42

What is an exchange rate? &#160;&#10;A)&#160;the ratio at which goods are traded between countries&#160;&#10;B)&#160;the denomination of currency used to purchase imports&#160;&#10;C)&#160;the price of one currency in terms of another&#160;&#10;D)&#160;the price at which one good trades for another

Accepted Answer

The answer of What is an exchange rate? &#160;&#10;A)&#160;the ratio...

Question 43

Suppose $1 equals &#8364;2.What does &#8364;1 equal? &#160;&#10;A)&#160;$0.25&#160;&#10;B)&#160;$0.50&#160;&#10;C)&#160;$1.00&#160;&#10;D)&#160;$2.00

Accepted Answer

The answer of Suppose $1 equals &#8364;2.What does &#8364;1 equal?...

Question 44

On Monday Meghan buys 13 Mexican pesos per Canadian dollar, and on Wednesday she buys 15 Mexican pesos per Canadian dollar.What has happened to the value of these two currencies? &#160;&#10;A)&#160;The Canadian dollar has appreciated, and the Mexican peso has appreciated.&#160;&#10;B)&#160;The Canadian dollar has depreciated, and the Mexican peso has depreciated.&#160;&#10;C)&#160;The Canadian dollar has appreciated, and the Mexican peso has depreciated.&#160;&#10;D)&#160;The Canadian dollar has depreciated, and the Mexican peso has appreciated.

Accepted Answer

The answer of On Monday Meghan buys 13 Mexican pesos...

Question 45

What is the foreign exchange rate? &#160;&#10;A)&#160;the current account&#160;&#10;B)&#160;the law of comparative advantage&#160;&#10;C)&#160;the financial account&#160;&#10;D)&#160;the price of one currency in terms of another

Accepted Answer

The answer of What is the foreign exchange rate? &#160;&#10;A)&#160;the...

Question 46

What does the term exchange rate refer to? &#160;&#10;A)&#160;to the total yearly amount of money changed from one country's currency to another country's currency&#160;&#10;B)&#160;to the amount of a country's currency that can be traded for one ounce of gold&#160;&#10;C)&#160;to the sum of net unilateral transfers&#160;&#10;D)&#160;to the price of one country's currency in terms of another country's currency

Accepted Answer

The answer of What does the term exchange rate refer...

Question 47

Suppose the exchange rate changes from &#8364;1 per Canadian dollar to &#8364;1.2 per Canadian dollar.What has happened to the Canadian dollar? &#160;&#10;A)&#160;It has appreciated, because its value has increased.&#160;&#10;B)&#160;It has appreciated, making Canadian goods cheaper in euros.&#160;&#10;C)&#160;It has depreciated, because its value has declined.&#160;&#10;D)&#160;It has depreciated, because its value has increased.

Accepted Answer

The answer of Suppose the exchange rate changes from &#8364;1...

Question 48

Which of the following would be represented as a debit item in the Canadian balance of payments? &#160;&#10;A)&#160;Canadian companies purchase cars from Italy.&#160;&#10;B)&#160;Canadian companies sell beef to Israel.&#160;&#10;C)&#160;The Canadian government receives transfers from foreign governments to support Canadian expenses incurred in Europe.&#160;&#10;D)&#160;Canadian residents receive gifts of money from friends abroad.

Accepted Answer

The answer of Which of the following would be represented...

Question 49

Suppose the Canadian dollar appreciates.How will this affect the Canadian economy? &#160;&#10;A)&#160;The value of the Canadian dollar will decrease.&#160;&#10;B)&#160;The value of foreign exchange will increase.&#160;&#10;C)&#160;Fewer Canadian dollars will be required to purchase foreign exchange.&#160;&#10;D)&#160;More Canadian dollars will be required to purchase foreign exchange.

Accepted Answer

The answer of Suppose the Canadian dollar appreciates.How will this...

Question 50

Suppose the dollar price of British pounds drops.What does this mean? &#160;&#10;A)&#160;that fewer dollars are needed to buy British pounds&#160;&#10;B)&#160;that more dollars are needed to buy British pounds&#160;&#10;C)&#160;that the euro has appreciated&#160;&#10;D)&#160;that the dollar has depreciated

Accepted Answer

The answer of Suppose the dollar price of British pounds...

Question 51

Suppose a German tourist buys Canadian dollars with euros in a Canadian airport.What type of market is this tourist participating in? &#160;&#10;A)&#160;a product market&#160;&#10;B)&#160;a factor market&#160;&#10;C)&#160;a foreign exchange market&#160;&#10;D)&#160;a speculative market

Accepted Answer

The answer of Suppose a German tourist buys Canadian dollars...

Question 52

Suppose the exchange rate changes from C$0.20 per &#8364;1 to C$0.18 cents per &#8364;1.What has happened to the Canadian dollar? &#160;&#10;A)&#160;It has appreciated, because its value has increased.&#160;&#10;B)&#160;It has appreciated, because its value has declined.&#160;&#10;C)&#160;It has depreciated, because its value has declined.&#160;&#10;D)&#160;It has depreciated, because its value has increased.

Accepted Answer

The answer of Suppose the exchange rate changes from C$0.20...

Question 53

What is the exchange rate? &#160;&#10;A)&#160;the ratio of exports to imports&#160;&#10;B)&#160;the interest that the Canadian government charges on international transactions&#160;&#10;C)&#160;the price of one nation's currency in terms of another nation's currency&#160;&#10;D)&#160;the price that central banks charge each other for currency trading

Accepted Answer

The answer of What is the exchange rate? &#160;&#10;A)&#160;the ratio...

Question 54

Which of the following is NOT a credit item in the Canadian balance of payments? &#160;&#10;A)&#160;Canadian imports of cars from Japan&#160;&#10;B)&#160;any transaction that results in an inflow of dollars&#160;&#10;C)&#160;a financial outflow&#160;&#10;D)&#160;a Canadian firm's purchase of steel from a European steel mill

Accepted Answer

The answer of Which of the following is NOT a...

Question 55

What is the value of the statistical discrepancy? &#160;&#10;A)&#160;It is always positive.&#160;&#10;B)&#160;It is always negative.&#160;&#10;C)&#160;It is always zero.&#160;&#10;D)&#160;It may be positive, negative, or zero.

Accepted Answer

The answer of What is the value of the statistical...

Question 56

Which of the following is a credit item in the Canadian balance of payments? &#160;&#10;A)&#160;Canadian companies sell merchandise abroad.&#160;&#10;B)&#160;Foreign companies sell merchandise to Canadian consumers.&#160;&#10;C)&#160;Canadians send money to foreign companies.&#160;&#10;D)&#160;Immigrants to Canada send presents of money to their families in their country of origin.

Accepted Answer

The answer of Which of the following is a credit...

Question 57

Suppose the price of foreign exchange drops.How will this affect the Canadian economy? &#160;&#10;A)&#160;Fewer Canadian dollars are needed to purchase foreign currency.&#160;&#10;B)&#160;More Canadian dollars are needed to purchase foreign currency.&#160;&#10;C)&#160;The same number of Canadian dollars are needed to purchase foreign currency.&#160;&#10;D)&#160;No Canadian dollars are needed to purchase foreign currency.

Accepted Answer

The answer of Suppose the price of foreign exchange drops.How...

Question 58

On Tuesday Thomas buys 125 Japanese yen per Canadian dollar, and on Wednesday he buys 120 Japanese yen per Canadian dollar.What has happened to the values of these two currencies? &#160;&#10;A)&#160;The Canadian dollar has appreciated, and the Japanese yen has appreciated.&#160;&#10;B)&#160;The Canadian dollar has depreciated, and the Japanese yen has depreciated.&#160;&#10;C)&#160;The Canadian dollar has appreciated, and the Japanese yen has depreciated.&#160;&#10;D)&#160;The Canadian dollar has depreciated, and the Japanese yen has appreciated.

Accepted Answer

The answer of On Tuesday Thomas buys 125 Japanese yen...

Question 59

What does it mean if the Canadian dollar depreciates? &#160;&#10;A)&#160;that the value of the Canadian dollar has increased&#160;&#10;B)&#160;that the value of foreign exchange has decreased&#160;&#10;C)&#160;that fewer Canadian dollars are required to purchase foreign exchange&#160;&#10;D)&#160;that more Canadian dollars are required to purchase foreign exchange

Accepted Answer

The answer of What does it mean if the Canadian...

Question 60

Which of the following would NOT increase France's exports to Canada? &#160;&#10;A)&#160;an appreciation of the Canadian dollar&#160;&#10;B)&#160;an appreciation of the euro&#160;&#10;C)&#160;a depreciation of the euro&#160;&#10;D)&#160;an rise in French preferences for Canadian goods

Accepted Answer

The answer of Which of the following would NOT increase...

Question 61

Which of the following is NOT assumed constant along the Canadian demand curve for foreign currency? &#160;&#10;A)&#160;the exchange rate&#160;&#10;B)&#160;interest rates in Canada&#160;&#10;C)&#160;expected inflation in Canada&#160;&#10;D)&#160;increases in Canadians' incomes

Accepted Answer

The answer of Which of the following is NOT assumed...

Question 62

Suppose the exchange rate has been $1.50 per &#163;1, but then it falls to $1.25 per &#163;1.All things equal, how would trade be affected? &#160;&#10;A)&#160;Canada would import more from Great Britain because the price of the pound has fallen.&#160;&#10;B)&#160;Canada would export more to Great Britain because the price of the pound has risen.&#160;&#10;C)&#160;Canada would export less to Great Britain because the price of the pound has risen.&#160;&#10;D)&#160;Canada would import more from Great Britain because the price of the pound has risen.

Accepted Answer

The answer of Suppose the exchange rate has been $1.50...

Question 63

Wayne Brown is a Canadian citizen studying on a U.S.campus.When he came to school in September he had C$400, with which he purchased US$300.Just before returning to Canada the following June, Wayne used his US$300 to purchase C$450.What was the purchasing power of the U.S.dollar in June compared to September? &#160;&#10;A)&#160;He could purchase 12.5 percent more Canadian dollars in June than he could in September.&#160;&#10;B)&#160;He could purchase 12.5 percent fewer Canadian dollars in June than he could in September.&#160;&#10;C)&#160;He could purchase 11.11 percent more Canadian dollars in June than he could in September.&#160;&#10;D)&#160;He could purchase 11.11 percent fewer Canadian dollars in June than he could in September.

Accepted Answer

The answer of Wayne Brown is a Canadian citizen studying...

Question 64

Suppose Europe and Canada are the only two regions in the world.Which of the following is NOT a reason Canadian residents would want to buy euros? &#160;&#10;A)&#160;so that Canadian residents can invest in Europe&#160;&#10;B)&#160;so that Canadian residents can buy European goods&#160;&#10;C)&#160;to improve the Canadian balance of payments&#160;&#10;D)&#160;so that Canadian residents can buy European stocks

Accepted Answer

The answer of Suppose Europe and Canada are the only...

Deck 16: International Finance