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If interest rates in Canada fall below those in the rest of the world then it depreciates Canada’s exchange rate and this may result in a surplus on Canada’s current account

 If interest rates in Canada fall below those in the rest of the world, then

a.it depreciates Canada’s exchange rate and this may result in a surplus on Canada’s
current account

b.the demand for Canadian dollars increases

c.exports from Canada to other countries decrease

d.imports into Canada from other countries increase

e.the balance of payments becomes negative

142.              Which of the following is not a factor explaining how deficits on current account
                            develop?

a.high interest rates

b.budgetary deficits

c.negative balance of payments

d.low productivity

e.the country’s popularity because of the strength and stability of its economy

143.              “It’s a competitive world out there and holding on to export markets is difficult.” The
                            government can do little to help if

a.its producers operate in a competitive market

b.its exchange rate depreciates

c.it pursues a budgetary surplus

d.it pursues lower interest rates than those in other countries

e.the economy’s productivity is persistently lower than other countries’

144.              If a country is experiencing chronic deficits on current account, what must ultimately
                            happen to its exchange rate?

a.it must appreciate

b.it must depreciate

c.the market will shift it from floating to fixed

d.the market will shift it from fixed to floating

e.it will become equalized, that is, the same rate as in other countries

145.              The total amount of outstanding IOUs a nation is obligated to repay other nations and
                            international organizations is called

a.current account

b.balance of payments

c.international trade

d.international debt

e.capital account

146.              Debt service is the

a.difference between merchandise exports and merchandise imports

b.interest payments on investments divided by the amount of unilateral transfers

c.percentage that interest payments on international debt is of a nation’s exports

d.difference between inflows and outflows on the country’s current account

e.value of a nation’s merchandise exports minus the value of its merchandise imports

147.              A small amount of international debt can become a heavy burden on a developing
                            economy if

a.interest payments are a large percentage of export revenues

b.a trade surplus develops

c.the economy grows rapidly

d.the country becomes more developed

e.total borrowings exceed the $50 million level fixed by the IMF

148.              According to the text, Zambia faces decreasing living standards because

a.it is hoarding gold

b.the kwacka is rising in value relative to the dollar

c.it has a positive balance on its current account

d.it has taken steps to reduce its international debt

e.its debt service is relatively high

Feb 11 2020 View more View Less

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