Question

6. The Canadian dollar appreciates if

A) Canadian real GDP decreases.

B) world prices for Canadian resources fall.

C) Canadian interest rates fall relative to other countries.

D) the Canadian inflation rate rises relative to other countries.

E) speculators believe the Canadian dollar will appreciate in the future.

29. When Canadian interest rates fall the

A) demand curve for Canadian dollars in the foreign exchange market shifts rightward.

B) Canadian inflation rate falls.

C) demand for Canadian exports decreases.

D) supply curve of Canadian dollars in the foreign exchange market shifts leftward.

E) Canadian dollar depreciates.

50. What increases the supply of Canadian dollars in the foreign exchange market?

A) An increase in demand for imports from R.O.W. by Canadians.

B) A decrease in demand for Canadian exports by non-Canadians.

C) The Canadian dollar is expected to appreciate next year.

D) U.S. interest rates fall.

E) None of the above.

45. A recessionary gap results from

A) depreciation of the C$ leading to decreased imports.

B) appreciation of the C$ leading to increased exports.

C) appreciation of the C$ leading to decreased exports.

D) depreciation of the C$ leading to increased imports.

E) depreciation of the C$ leading to decreased exports.

36. As the Canadian dollar strengthens, Canadian

A) real GDP increases.

B) inflation decreases.

C) exports increase.

D) imports decrease.

E) unemployment decreases.

Answer 1

6) the Canadian dollar episodes if the speculators believe that the Canadian dollar will appreciate in the future as this speculation leads to an increase in the demand for Canadian dollar.

Hence, option E is correct.

29) when Canadian interest rates fall, there is an Increase in net capital outflow. Increase internet capital outflow leads to depreciation of Canadian dollar.

Hence, when Canadian interest rates fall the Canadian dollar depreciates.

Therefore, option E is correct.

50) an increase in demand for imports from rest of the world by Canadians increases the supply of Canadian Dollars in the foreign exchange market.

Hence, option A is correct.

45) recessionary gap results from the depreciation of the Canadian dollar leading to Decreased imports(as it increases Aggregate demand).

Hence, option A is correct.

36) as the Canadian dollar strengthens Canadian inflation decreases because of the Decrease in Aggregate demand.

Hence, option B is correct.