Many Canadian natural resource companies run mines in other countries. What impact would an expansionary monetary policy undertaken by the Bank of Canada have on these companies?
A)Expansionary monetary policy would encourage these firms to borrow abroad.
B)Expansionary monetary policy would make hiring in Canada easier for these firms.
C)Expansionary monetary policy would raise the tax bill for these firms.
D)Expansionary monetary policy would reduce the value of the profits earned in other countries.
E)Expansionary monetary policy will make it more difficult for these firms to raise funds in Canada.

Question

Quizplus · Accepted Answer

An expansionary monetary policy is likely to decrease the value of the Canadian dollar. This, in turn, would reduce the value of the profits earned by Canadian natural resource companies in other countries, which are typically denominated in foreign currencies.

Many Canadian Natural Resource Companies Run Mines in Other Countries