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True or False
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1
If the Panamanian balboa is worth $0.20 Canadian, then $1 Canadian is worth 4 balboas.
A)True
B)False
2
The purchasing power parity theory suggests that exchange rates adjust so as to equate the purchasing power of each currency.
A)True
B)False
3
A major source of demand for the Canadian dollar in the international money markets is the desire of foreigners to buy Canadian exports.
A)True
B)False
4
A resident in Canada receiving a British pension will have a demand for the British pound.
A)True
B)False
5
An increase in Canadian interest rates will lead to an appreciation of the Canadian dollar.
A)True
B)False
6
When the Canadian dollar depreciates, the effective price of Canadian exports increases and, as a result, total exports are likely to fall.
A)True
B)False
7
If the Canadian dollar appreciates, cross-border shopping by Canadians will increase.
A)True
B)False
8
If Canada were on a fixed exchange-rate system, an increase in the demand for the Canadian dollar would result in the dollar being undervalued.
A)True
B)False
9
A fixed exchange rate above the market value will lead to an outflow of foreign currencies.
A)True
B)False
10
An increase in imports will have a negative effect on the current account balance.
A)True
B)False





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