Question : 41) An appreciation of the Canadian dollar implies A) a fall : 1384543

41) An appreciation of the Canadian dollar implies

A) a fall in the external value of the dollar, such that fewer dollars are required to purchase foreign currency.

B) a fall in the external value of the dollar, such that more dollars are required to buy foreign currency.

C) a rise in the external value of the dollar, such that fewer dollars are required to purchase foreign currency.

D) a rise in the external value of the dollar, such that more dollars are required to purchase foreign currency.

E) is shown only by changes in the official reserves of the Bank of Canada and does not influence the exchange rate.

42) For Canada, the term “exchange rate,” as used by most economists, refers to

A) the price at which purchases and sales of foreign goods take place in Canada.

B) Canadian exports minus imports.

C) the price of foreign currency in terms of Canadian dollars.

D) the ratio of Canadian exports to imports.

E) dividends from foreign sources minus interest paid by residents to non-residents.

43) A depreciation of the Canadian dollar implies

A) a fall in the external value of the dollar, such that fewer dollars are required to purchase foreign currency.

B) a fall in the external value of the dollar, such that more dollars are required to buy foreign currency.

C) a rise in the external value of the dollar, such that fewer dollars are required to purchase foreign currency.

D) a rise in the external value of the dollar, such that more dollars are required to purchase foreign currency.

E) a rise in the official reserves of foreign currency held by the Bank of Canada.

44) A rise in the Canadian-dollar price of foreign currency is referred to as

A) an appreciation of the Canadian dollar.

B) a depreciation of the Canadian dollar.

C) a decrease in the exchange rate.

D) a gain in the relative value of the Canadian dollar.

E) a rise in the external value of the Canadian dollar.

45) Suppose there are only two countries in the world, countries A and B. If the currency of country A appreciates, the currency of country B

A) can appreciate relative to other countries.

B) must appreciate.

C) may appreciate or depreciate, depending on the elasticity of demand for the exports of country A.

D) must depreciate.

E) may appreciate or depreciate, depending on the volume of trade between the two countries.

46) Consider Canada’s trade with the United States. Canadian exports to the U.S., Americans travelling in Canada, and U.S. capital flows into Canada all give rise to

A) a supply of U.S. dollars on the foreign-exchange market.

B) a demand for U.S. dollars on the foreign-exchange market.

C) a lower value of the Canadian dollar.

D) a decrease in U.S. dollar reserves in Canada.

E) a depreciation of the Canadian dollar.

47) Imports into Canada, Canadians travelling outside of Canada, and capital flows out of Canada to purchase foreign assets all give rise to

A) a supply of Canadian currency on the foreign-exchange market.

B) a supply of foreign currency on the foreign-exchange market.

C) a higher value of the Canadian dollar.

D) an increase in foreign-exchange reserves in Canada.

E) an appreciation of the Canadian dollar.

48) An American traveling to Canada converts U.S.$100 into $118 Canadian dollars. One month later he does the same thing and receives $125 Canadian dollars. There are no transactions costs. The Canadian-U.S. exchange rate has

A) risen.

B) fallen.

C) neither risen nor fallen.

D) either risen or fallen; more information is required to determine the direction of movement with certainty.

49) If the exchange rate between British pounds sterling and the Canadian dollar is 1 pound = $2.80, then

A) one pound exchanges for 0.28 dollars.

B) one pound exchanges for 2.40 dollars.

C) one dollar exchanges for 0.280 pounds.

D) one dollar exchanges for 0.357 pounds.

E) one dollar exchanges for 1.40 pounds.

50) A Canadian traveling to the United States converts $100 Canadian into 85 U.S. dollars. One month later he does the same thing and receives only 80 U.S. dollars. There are no transactions costs. The Canadian-U.S. exchange rate has ________ and the Canadian dollar has ________ relative to the U.S. dollar.

A) increased; depreciated

B) fallen; depreciated

C) increased; appreciated

D) fallen; appreciated

E) not changed; remained stationary