If the exchange rate is such that $1 equal 5 euros, then the price of a euro is A) $5.

If the exchange rate is such that $1 equal 5 euros, then the price of a euro is A) $5.

 If the exchange rate is such that $1 equal 5 euros, then the price of a euro is

A) $5.

B) $1.

C) $0.40.

D) $0.20.

 

52) An increase in the value of a domestic currency in terms of other currencies is known as

A) an appreciation.

B) a depreciation.

C) a flexible exchange rate.

D) a discount rate.

53) Assume that there is an increased demand in Canada for European wines. If all other factors are held constant, this will result in

A) an increase in the exchange rate for euros.

B) an appreciation of the dollar.

C) a movement along the demand curve for European wine.

D) a decrease in the par value of the euro.

 

54) A depreciation of the Canadian dollar relative to the euro would tend to

A) increase Canadian imports from Europe.

B) increase Canadian exports to Europe.

C) decrease Canadian exports to Europe.

D) increase both Canadian imports from Europe and Canadian exports to Europe.

 

55) The demand for foreign currency in Canada is a

A) direct demand.

B) derived demand based on the demand for Canadian products.

C) derived demand based on the demand for foreign products.

D) direct demand based on the demand for Canadian dollars.

 

56) Suppose the exchange rate is $5 for a euro; suppose further that the exchange rate falls to $4 for a euro. We would then expect to see

A) more exports to Europe since the price of the euro has risen.

B) fewer exports to Europe since the price of the euro has risen.

C) more Canadian imports from Europe since the price of the euro has fallen.

D) more Canadian exports since the price of the dollar has fallen.

57) Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of foreign currencies is referred to as

A) an appreciation.

B) a depreciation.

C) a devaluation.

D) a revaluation.

 

58) As the dollar price of a euro falls,

A) Canadians will purchase fewer European imports.

B) the quantity of euros supplied will increase.

C) European goods will be less expensive for Canadians.

D) the Europeans will increase their purchases of Canadian assets.

 

59) As the dollar price of a euro increases

A) the demand for euros will increase.

B) the price of European goods will fall for Canadians.

C) the Europeans will desire to purchase more Canadian goods.

D) Canadians will increase their travel to Europe.

 

60) Which of the following will lead to a depreciation of the dollar against the British pound?

A) an increase in British demand for Canadian imports

B) an increase in Canadian interest rates

C) a decrease in British demand for Canadian assets

D) a decrease in Canadian demand for British goods