Question : 51) A Canadian traveling to the United States converts $100 : 1384544

51) A Canadian traveling to the United States converts $100 Canadian into 95 U.S. dollars. One month later he does the same thing and receives 105 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

52) A fall in the Canadian-dollar price of foreign currency is referred to as

A) a depreciation of the Canadian dollar.

B) an increase in the exchange rate.

C) a loss in the relative value of the Canadian dollar.

D) a fall in the external value of the Canadian dollar.

E) an appreciation of the Canadian dollar.

53) To macroeconomists, “foreign exchange” refers to

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

B) the movement of goods and services from one country to another.

C) foreign currency or various claims on it.

D) the difference between exports and imports.

E) the actual transaction that occurs as currencies are traded.

54) Other things being equal, an appreciation of the domestic currency

A) lowers the domestic price of imported goods.

B) raises the domestic price of imported goods.

C) raises the world price of imported goods.

D) lowers the world price of imported goods.

E) lowers the value of our currency in a foreign country.

55) Other things being equal, a depreciation of the domestic currency tends to

A) encourage merchandise imports.

B) discourage foreigners from travelling to Canada.

C) encourage Canadians to travel abroad.

D) have a negative effect on the domestic trade account.

E) encourage merchandise exports.

56) Other things being equal, an appreciation of the domestic currency tends to

A) discourage Canadians from travelling abroad.

B) encourage foreigners to travel to Canada.

C) have a positive effect on the domestic trade account.

D) encourage merchandise imports.

E) encourage merchandise exports.

57) The demand for Canadian dollars in the foreign-exchange market is derived from

A) exports from Canada + capital outflows from Canada.

B) exports from Canada + capital inflows to Canada.

C) imports to Canada + capital outflows from Canada.

D) imports to Canada + capital inflows to Canada.

E) the Canadian government’s holding of official reserves.

58) The supply curve for Japanese yen on the foreign-exchange market is upward-sloping when plotted against the exchange rate (measured as the Canadian dollar price of one Japanese yen) because

A) when the dollar appreciates, Canadian goods are cheaper in Japan.

B) a depreciation of the dollar will cause the yen prices of Canadian goods to rise.

C) when the dollar depreciates, the price of Japanese exports to Canada decreases.

D) an appreciation of the dollar will cause the yen prices of Canadian exports to fall.

E) when the dollar depreciates, Canadian goods are cheaper in Japan, and more Canadian exports are therefore demanded.

59) The supply of Canadian dollars to the foreign-exchange market, which is also the demand for foreign currency, is derived from

A) imports to Canada + capital inflows to Canada.

B) exports from Canada + capital outflows from Canada.

C) exports from Canada + capital inflows to Canada.

D) the Canadian government’s holdings of official reserves.

E) imports to Canada + capital outflows from Canada.

60) Suppose a Canadian grocery chain imports one million kilograms of cheese from a Swiss exporter. Ceteris paribus, the effect is to

A) decrease the number of Canadian dollars needed to buy one Swiss franc.

B) increase the number of Swiss francs needed to buy one Canadian dollar.

C) increase the demand for Swiss francs in the foreign-exchange market.

D) increase the supply of Swiss francs in the foreign-exchange market.

E) increase the demand for Canadian dollars in the foreign-exchange market.