 |
| 1 | |
What is the value of the euro in dollars if a French importer can buy 8 dollars for 10 euros? |
| | A) | $1.25 |
| | B) | $0.8 |
| | C) | $80 |
| | D) | $2 |
|
|
|
| 2 | |
If the Canadian dollar appreciates in value against the Mexican peso, what happens to the value of the Mexican peso against the dollar? |
| | A) | It appreciates. |
| | B) | It depreciates. |
| | C) | It might appreciate or depreciate. |
| | D) | It remains unchanged. |
|
|
|
| 3 | |
What currency will an American resident who receives interest on the Canadian savings bond she holds be demanding? |
| | A) | Canadian dollars |
| | B) | U.S. dollars |
| | C) | Euros |
| | D) | British pounds |
|
|
|
| 4 | |
What is arbitrage? |
| | A) | The cost of shipping and insuring exported goods |
| | B) | The buying of a currency at one price and its immediate sale at another price |
| | C) | The cost of holding goods whose price is expected to increase in the future |
| | D) | Speculation on the future price of a currency |
|
|
|
| 5 | |
If Canada and the United Kingdom are both on flexible exchange rate systems, what would happen if the United Kingdom experiences rapid inflation, while prices remain steady in Canada? |
| | A) | The Canadian dollar will depreciate. |
| | B) | The British pound will depreciate. |
| | C) | The British pound will appreciate. |
| | D) | The exchange rate will not change. |
|
|
|
| 6 | |
Which of the following would result from an increase in Canada’s GDP? |
| | A) | Canadian exports would rise. |
| | B) | Both Canadian exports and imports would rise. |
| | C) | Canadian exports would rise, but imports would decrease. |
| | D) | Canadian imports would rise. |
|
|
|
| 7 | |
Refer to Table 11.6 to answer this question. What is Canada’s balance of trade? |
| | A) | A surplus of $150 billion |
| | B) | A surplus of $5 billion |
| | C) | A deficit of $15 billion |
| | D) | A deficit of $10 billion |
|
|
|
| 8 | |
Refer to Table 11.6 to answer this question. What is Canada’s current account balance? |
| | A) | A surplus of $10 billion |
| | B) | A surplus of $15 billion |
| | C) | A deficit of $10 billion |
| | D) | A deficit of $20 billion |
|
|
|
| 9 | |
Refer to Table 11.6 to answer this question. What is Canada’s capital account balance? |
| | A) | A deficit of $10 billion |
| | B) | A surplus of $10 billion |
| | C) | A surplus of $5 billion |
| | D) | A surplus of $30 billion |
|
|
|
| 10 | |
All of the following groups, except one, demand Canadian dollars. Which is the exception? |
| | A) | An American tourist visiting Canada |
| | B) | Canadians who received dividends from American corporations |
| | C) | Texans who purchase Alberta beef |
| | D) | Americans who receive interest on their holdings of Canadian savings bonds |
| | E) | International speculators who think that the Canadian dollar will soon appreciate |
|
|
|
| 11 | |
Which of the following would increase the supply of Canadian dollars on the international money market? |
| | A) | Canadians travelling abroad |
| | B) | An American corporation investing in Canada |
| | C) | A Canadian resident receiving interest payments on a foreign bond |
| | D) | A Canadian exporter selling products abroad |
| | E) | A retired American, living on Vancouver Island, receiving a U.S. Social Security pension cheque |
|
|
|
| 12 | |
If a country is suffering perennial balance of payments deficits, all of the following, except one, will help solve the problem. Which is the exception? |
| | A) | The introduction of quotas on imported goods |
| | B) | An increase in interest rates |
| | C) | The introduction of exchange controls |
| | D) | The reduction in tariffs on imported goods |
| | E) | An increase in subsidies to exporting industries |
|
|
|
| 13 | |
What does managed (or dirty) float mean? |
| | A) | That a country’s currency is fixed to the price of gold |
| | B) | That a country’s currency is fixed to the value of the U.S. dollar |
| | C) | That a country’s balance of payments is persistently in deficit |
| | D) | That the country’s central bank fixes the value of its currency |
| | E) | That a country’s central bank buys and sells currencies in order to smooth out short-run fluctuations in its own currency |
|
|
|
| 14 | |
What is purchasing power parity theory? |
| | A) | A theory suggesting that exchange rates will change to equate the purchasing power of each currency |
| | B) | A theory suggesting that exchange rates tend to diverge over time |
| | C) | A theory suggesting that all currencies will be, in time, at par |
| | D) | A formula used to calculate the exchange rate of one currency for another |
|
|
.