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1
What will be the result of a change in exchange rates if fewer Mexican pesos are needed to buy a Canadian dollar?
A)Canadians will buy more Mexican goods and services.
B)Mexicans will buy fewer Canadian goods and services.
C)Canadians will buy fewer Mexican goods and services.
D)Mexicans will buy more Mexican goods.
2
Assuming a flexible exchange rate system, what would happen to the value of the Canadian dollar and the Mexican peso if Canadian interest rates increased while Mexican rates remained the same?
A)The price of dollars in terms of the peso would increase.
B)The price of pesos in terms of dollars would increase.
C)The peso in terms of dollars would appreciate.
D)The Canadian dollar in terms of the peso would depreciate.
3
Which of the following statements is true about the supply curve for the Canadian dollar?
A)It is downward sloping because a lower price for the dollar means Canadian goods are cheaper to foreigners.
B)It is downward sloping because a higher price for the dollar means Canadian goods are cheaper to foreigners.
C)It is upward sloping because a lower price for the dollar means foreign goods are cheaper to Canadians.
D)It is upward sloping because a higher price for the dollar means foreign goods are cheaper to Canadians.
4
Assuming a fixed exchange rate system, which of the following would contribute to a Canadian balance of payments deficit?
A)Leonard Cohen and Shania Twain team up for a giant outdoor concert in Shanghai.
B)The number of Indian tourists visiting Canada increases significantly.
C)The United States increases its tariff on Canadian softwood lumber.
D)A wealthy Taiwanese family builds a mansion in Calgary.
E)Honda builds a new assembly plant outside Montreal.
5
All of the following, except one, would help explain differences in purchasing power among countries. Which is the exception?
A)Many services not traded internationally
B)Financial assets seldom traded internationally
C)The existence of transportation and insurance costs
D)The expression of particular preferences by consumers
E)The existence of tariffs and other trade restrictions
6

Refer to Table 11.7 to answer this question. What is the price of one Canadian dollar in Year 2?
A)72 yen
B)80 yen
C)88 yen
D)Cannot be determined
7

Refer to Table 11.8 to answer this question. Which of the following statements is correct?
A)The Canadian dollar has appreciated, and the Japanese yen has depreciated.
B)The Canadian dollar has depreciated, and the Japanese yen has appreciated.
C)The Japanese yen is now worth less in terms of the Canadian dollar.
D)The Canadian dollar is now worth more in terms of the Japanese yen.





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