Download 1. All of the following would tend to make actual deposit creation

1.
All of the following would tend to make actual deposit creation less than
the theoretical maximum EXCEPT:
a. A desire of banks to delay making loans in expectation of higher interest
rates.
b. A desire of households to maintain a certain fraction of their money
holdings in the form of currency.
c. A desire of households to stash money in safety-deposit boxes.
d. A desire of banks to maximize profits.
e. All of the above would theoretically reduce the amount of deposit
creation.
2.
Assume there is a banking system where all the banks are required to keep
a reserve of 10 percent against their deposit liabilities. Further, assume
the banks keep no excess reserves. Bank A receives a new deposit of $100,000.
The largest new loan this bank could make is
a. $1,000.
b. $10,000.
c. $90,000.
d. $100,000.
e. $900,000.
Case 26-2
The Bank of Canada sells $10 million worth of government securities to an
investment dealer with a cheque drawn on the dealer's account with a chartered
bank. The desired reserve ratio of all banks is 10 percent. Assume all chartered
banks are operating with no excess reserves and there is no cash drain.
3.
In the situation described in Case 26-2, if the Chartered Bank decreases its
loans as a result of its fall of reserves with the Bank of Canada, the second
generation bank will
a. increase its loans by $9.0 million.
b. increase its loans by $8.1 million.
c. decrease its loans by $9.0 million.
d. decrease its loans by $8.1 million.
e. not change its loan position because the change in reserves will not affect
it.
4.
In
in
a.
b.
c.
d.
e.
the situation described in Case 26-2, the total amount of desired reserves
the banking system would
increase by $100 million.
increase by $10 million.
decrease by $10 million.
decrease by $91 million.
decrease by $100 million.
Case 26-3
Suppose the Bank of Canada sells $10 million worth of government securities to
an investment dealer with a cheque drawn on the dealer's account with a chartered
bank. The desired reserve ratio of all banks is 10 percent but there is now a
cash drain of an additional 10 percent. If we assume that the banks are still
operating with no excess reserves, answer the following three questions
5.
In the situation described in Case 26-3, all the Chartered banks in the
banking system would
a. increase loans by $50 million.
b. increase loans by $40 million.
c. decrease its loans by $8 million.
d. decrease its loans by $40 million.
e. decrease its loans by $50 million.
Case 26-1
The Bank of Canada purchases $5 million worth of government securities from an
investment dealer with a cheque drawn on the Bank of Canada. The dealer deposits
this cheque at a Canadian Chartered Bank. The desired reserve ratio of all banks
is 25 percent. Assume all chartered banks are operating with no excess reserves
and there is no cash drain.
6.
In the situation described in Case 26-1, the maximum creation of new deposits
by the banking system, including the dealer's original deposit in the
Chartered Bank, is
a. $25 million.
b. $22.5 million.
c. $20 million.
d. $15 million.
e. $5 million.
7.
Changes in the real demand for money are brought about by
a. changes in interest rates.
b. the variation in the price level.
c. fluctuations in the prices of financial assets.
d. variations in real GDP.
e. none of the above.
8.
An increase in the real demand for money could NOT be caused by:
a. a rise in both the price level and the nominal money supply by the same
percentage.
b. an increase in the real income to households.
c. a decrease in the interest rate.
d. the introduction of more Near monies into the economy.
e. a decrease in the price level.
9.
According to the liquidity preference theory of the rate of interest, if the
supply of money increases, then, ceteris paribus, bond prices will
a. fall as the rate of interest rises.
b. rise as the rate of interest rises.
c. fall as the rate of interest falls.
d. rise as the rate of interest falls.
10. If the economy is currently in monetary equilibrium, an increase in the money
supply will
a. not change the equilibrium conditions.
b. cause a reduction in the demand for money, leading to a higher rate of
interest.
c. cause an excess demand for money and a decrease in the rate of interest.
d. cause an increase in the demand for money, leading to a lower rate of
interest.
e. lead to a movement down the money demand curve to a lower rate of interest.
11. A rise in the price level,
a. increase the demand for
b. increase the demand for
c. decrease the demand for
d. decrease the demand for
12. A decrease in the price
a. increase the demand
b. increase the demand
c. decrease the demand
d. decrease the demand
e. decrease the demand
given
money
money
money
money
no change in
and increase
and decrease
and increase
and decrease
the supply of money, will
aggregate expenditure.
aggregate expenditure.
aggregate demand.
aggregate demand.
level, given no change in the supply of money, will
for money and increase aggregate expenditure.
for money and decrease aggregate expenditure.
for money and increase aggregate demand.
for money and decrease aggregate demand.
for money and leave aggregate demand unchanged.
13. A change in interest rates will affect aggregate demand through which of the
following changes?
a. a shift of the investment demand function and a movement along the
aggregate expenditure curve.
b. a movement along the investment demand function and a shift of the
aggregate expenditure curve.
c. a shift of both the investment demand function and the aggregate
expenditure curve.
d. movements along the investment demand function and the aggregate
expenditure curve.
e. a movement along the aggregate expenditure curve.
14. A decrease in the money supply is most likely to
a. raise interest rates, investment, and aggregate expenditures.
b. raise interest rates, lower investment, and lower aggregate expenditures.
c. lower interest rates, raise investment, and raise aggregate expenditures.
d. lower interest rates, investment, and aggregate expenditures.
e. raise interest rates and investment, and lower aggregate expenditures.
15. The impact of monetary policy on aggregate expenditures will be smaller the
a. greater the elasticity of the liquidity preference and investment demand
functions.
b. less the elasticity of the liquidity preference and investment demand
functions.
c. greater the elasticity of the liquidity preference schedule and the less
the elasticity of the investment demand function.
d. less the elasticity of the liquidity preference schedule and the greater
the elasticity of the investment demand function.
16. In determining the negative slope of the AD curve, a rise in the price level
causes the transactions demand for money to
a. decrease, shifting the liquidity preference curve downward, lowering the
interest rate and increasing desired investment, causing the aggregate
expenditure curve to shift upward.
b. decrease, shifting the liquidity preference curve upward, raising the
interest rate and increasing desired investment, causing the aggregate
expenditure curve to shift upward.
c. increase, shifting the liquidity preference curve upward, raising the
interest rate and reducing desired investment, causing the aggregate
expenditure curve to shift upward.
d. increase, shifting the liquidity preference curve downward, lowering the
interest rate and reducing desired investment, causing the aggregate
expenditure curve to shift downward.
e. increase, shifting the liquidity preference curve upward, raising the
interest rate and reducing desired investment, causing the aggregate
expenditure curve to shift downward.
17. Refer to Figure 27-2. Starting from the equilibrium at E0, an increase in
the real GDP will lead to a
a. shift of the Ms curve to the left and an increase in the interest rate.
b. shift of the Ms curve to the right and a fall in the interest rate.
c. downward movement along the LP curve and a lower interest rate.
d. shift of the LP curve to the left and a fall in the interest rate.
e. shift of the LP curve to the right and an increase in the interest rate.
18. Referring to Figure 27-2, The process of adjustment in the money market, when
the interest rate is at i1 is best described as the
a. excess demand for money leads to a sale of bonds, which in turn causes
the interest rate to rise.
b. Ms curve will shift to the left as to maintain the interest rate at i2.
c. interest rate will remain at i2, because the money market is in equilibrium
at this rate.
d. excess supply of money leads to the purchase of bonds, which in turn causes
the interest rate to fall to io.
e. none of the above.
19. Refer to Figure 27-4. Suppose that the economy is in equilibrium at Eo and
that the supply of money is held constant. In the long run, the economy will
move to
a. E2 because of an increase in consumer expenditure.
b. E2 because of an fall in the interest rates.
c. E1 because of a fall in the external value of our dollar.
d. E1 because of an increase in wages.
e. none of the above.
20. Suppose an individual in the community sells $1000 worth of government
securities to the Bank of Canada and puts the money under his mattress. As
a result of this transaction the
a. deposits will increase by a multiple of $1000 depending on the reserve
ratio.
b. loans will increase by a multiple of $1000 depending on the value of the
reserve ratio.
c. nation's money supply will increase by $1000.
d. nation's money supply will stay constant.
e. nation's money supply will decrease by $1000.
21. The purchase of government bonds by the Bank of Canada is predicted to
a. increase the loans granted by the chartered banks.
b. increase the interest rate.
c. be an effective anti-inflationary policy.
d. decrease the price of bonds.
e. decrease the reserves of chartered banks.
22. The Bank of Canada would tend to increase the money supply by
a. raising the bank rate.
b. selling foreign currency reserves in the international market.
c. selling government bonds on the open market.
d. transferring government accounts from the Bank of Canada to the chartered
banks.
e. all of the above.
23. If the Bank of Canada buys $100 of government bonds from the nonbank private
sector, the desired reserve ratio is 10 percent, and the chartered banks have
no excess reserves, this open-market sale will enable the chartered banks
to
a. increase reserves by $90, deposits by $100, and make no change on loans.
b. increase reserves by $100, loans by $900, and deposits by $1,000.
c. reduce reserves by $90, loans by $90, and deposits by $100.
d. reduce reserves by $100, loans by $900, and deposits by $1,000.
e. reduce reserves by $100, loans by $1,000, and deposits by $1,000.
24. The best description of the cause-and-effect chain of a tight monetary policy
is that
a. a decrease in the money supply will lower the interest rate, increase
investment spending, and increase real GDP.
b. a decrease in the money supply will raise the interest rate, decrease
investment spending, and decrease real GDP.
c. an increase in the money supply will lower the interest rate, lower
investment spending, and decrease real GDP.
d. an increase in the money supply will raise the interest rate, decrease
investment spending, and increase real GDP.
e. an increase in the money supply will raise the interest rate, increase
investment spending, and decrease real GDP.
25. The best description the cause-and-effect chain of an expansionary monetary
policy is that
a. an increase in the money supply will lower the interest rate, raise
investment spending, and increase real GDP.
b. an increase in the money supply will raise the interest rate, decrease
investment spending, and increase real GDP.
c. an increase in the money supply will raise the interest rate, increase
investment spending, and increase real GDP.
d. a decrease in the money supply will lower the interest rate, increase
investment spending, and increase real GDP.
e. a decrease in the money supply will raise the interest rate, decrease
investment spending, and decrease real GDP.
26. When there is a recessionary gap, an appropriate monetary policy could
include
a. increasing the bank rate.
b. increasing the prime rate.
c. increasing reserve requirements.
d. switching government accounts from the Bank of Canada to the chartered
banks.
e. the sale of government securities to the public.
27. If investment spending is sensitive to changes in interest rates, then
expansionary monetary policy will potentially
a. decrease aggregate supply since interest rates will rise but will not
affect aggregate demand.
b. decrease aggregate supply but increase aggregate demand.
c. increase aggregate supply but decrease aggregate demand.
d. increase aggregate supply since interest rates will rise but will not
affect aggregate demand.
e. increase aggregate supply and increase aggregate demand.
28. A stable money supply rule will contribute to
a. inflation.
b. monetary shocks if the demand for money fluctuates.
c. stable growth of national income.
d. stability of the price level.
e. the Bank of Canada's ability to "fine tune" the economy.
29. Most economists believe all of the following statements EXCEPT:
a. An ideal monetary policy would allow the money supply to grow at the same
rate of growth as nominal national income.
b. It is not possible to slow the rate of inflation without slowing the growth
of the money supply.
c. Monetary policy does not have real effects in the long run.
d. The growth rate of the money supply should be one intermediate target in
the conduct of monetary policy.
30. If the unemployment rate is above the NAIRU, all of the following are true
EXCEPT:
a. There will be downward pressure on wages.
b. The SRAS curve will shift upward.
c. There will be an output gap.
d. Real national income will be below potential real national income.
e. There will be a recessionary gap.
31. When the monetary authorities respond to a single supply shock with monetary
validation, we can expect an increase in
a. the money supply but a decrease in costs and prices.
b. costs but a decrease in real national income.
c. the size of the output gap.
d. costs, the price level, and the money supply.
e. none of the above.
32. Single adverse supply shocks, if there is no monetary validation, will
a. eventually be self-correcting as wages slowly fall.
b. never be self-correcting without government policy to expand the money
supply.
c. be self-correcting only if the aggregate demand curve shifts.
d. result in a permanent output gap.
e. have no short-run or long-run effects.
33. There can be strong pressure on Bank of Canada to validate an adverse supply
shock. The motive behind this pressure is
a. to reduce unemployment below the NAIRU.
b. that Bank of Canada must be seen to be pursuing a restrictive monetary
policy, in order to stop any expectational inflation.
c. that wages often fall only very slowly, so the adjustment back to full
employment can take a very long time.
d. that there is the danger of initiating a wage-price spiral.
e. to keep a "healthy" amount of inflation in the economy.
34. If the economy is faced with continued supply shocks, such as annual wage
increases for union workers, and there is no monetary validation, we can
expect
a. an inflationary gap.
b. a one-time rise in the price level.
c. rising unemployment until the wage increases cease, or are offset by other
wage decreases.
d. a shrinking output gap.
e. peace in labour-management relations.
35. Assume that an economy is currently in long-run equilibrium is at its
potential output and that it is subjected to a positive demand shock. When
the economy moves back to producing its potential level of national income,
the price level will be
a. equal to what it was originally before the demand shock.
b. lower than it was originally before the demand shock.
c. higher than it was before the demand shock.
d. lower than it was in the short-run equilibrium but higher than it was
originally.
36. The reason why inflation can persist even after its original causes have been
removed is that
a. workers expect wage increases to match increases in labour productivity.
b. workers are willing to accept wage increases lower than the increase in
productivity.
c. the Bank of Canada increases money supply to match increases in real GDP.
d. inflationary expectations cause SRAS to continue shifting upwards.
e. governments embark on a deficit elimination program.
37. When monetary authorities seek to stop a sustained inflation, they seek to
remove the inflationary gap by
a. shifting the SRAS curve upward.
b. shifting the SRAS curve downward.
c. increasing the outward shift of the AD curve.
d. stopping the outward shift of the AD curve.
e. taking no action and allowing the market to correct itself.
38. The reason why stagflation occurs when Bank of Canada attempts to remove a
sustained inflation is because inflationary expectations cause the
a. AD curve to shift too far to the right.
b. AD curve to shift too far to the left.
c. SRAS curve to continue shifting downward.
d. SRAS curve to continue shifting upward.
39. When an expansionary monetary policy is causing a continually increasing rate
of inflation,
a. the SRAS curve is shifting to the right and the AD curve is shifting to
the left.
b. the SRAS curve is shifting to the left and the AD curve is shifting to
the right.
c. only the AD curve is shifting.
d. only the SRAS curve is shifting.
e. inflationary expectations are likely to be constant.
40. If, as the New Classical theories suggest, all labour markets had perfectly
flexible wages, real wages would rise when real GDP
a. rises and fall when real GDP falls.
b. rises and remain constant when real GDP falls.
c. falls and remain constant when real GDP rises.
d. falls and rise when real GDP falls.
e. is constant and fall when real GDP falls
41. New Classical theories of the labour market feature _____ wages, and thus
involuntary unemployment _____ with real GDP.
a. perfectly flexible; does not exist
b. perfectly flexible; varies countercyclically
c. sticky; varies procyclically
d. sticky; varies countercyclically
e. sticky; does not exist
42. In contrast to continuous bargaining of wages and employment, long-term
contracts, an important feature of ________ macroeconomics, leads to a labour
market in which involuntary unemployment is ________.
a. New Keynesian; possible
b. New Keynesian; impossible
c. New Classical; possible
d. New Classical; impossible
43. Long-term labour contracts providing a steadily rising wage path over a
career
a. refute microeconomic theory because on average the worker is paid the
value of their output to the firm.
b. refute microeconomic theory because on average the worker is paid MORE
than the value of their output to the firm.
c. support microeconomic theory because on average the worker is paid the
value of their output to the firm.
d. support microeconomic theory because on average the worker is paid MORE
than the value of their output to the firm.
44. According to macroeconomic theory, other things constant, when there is an
increase in real output it results in
a. a decrease in cyclical unemployment.
b. a decrease in NAIRU.
c. an increase in NAIRU.
d. an increase in frictional unemployment.
e. an increase in structural unemployment.
45. Economic growth usually _____ changes in the structure of labour demand,
which puts _____ pressure on NAIRU.
a. slows down; upward
b. slows down; downward
c. speeds up; downward
d. speeds up; upward
46. Which of the following would be the most appropriate policy for reducing
cyclical unemployment?
a. a combination of tax cuts and increased government spending.
b. a decrease in the money supply.
c. increased benefits for workers covered by employment insurance.
d. reduced benefits for workers covered by employment insurance.
e. introduction of programs for the retraining and relocation of labour.
47. The accumulated stock of government debt will begin to fall
a. if the debt-service payments are zero.
b. if the government does not borrow money.
c. if the growth rate of real GDP is higher than the real interest rate.
d. when annual budgets are in deficit.
e. when annual budgets are in surplus.
48. Suppose that the real rate of interest is 4 percent and the growth rate of
real GDP is 2 percent. If the government has a positive stock of outstanding
debt and their goal is to hold the debt-to-GDP ratio constant at its current
level, they must
a. eliminate the overall deficit.
b. run an annually balanced budget.
c. run a cyclically balanced budget.
d. run a primary budget deficit.
e. run a primary budget surplus.
49. In a closed economy, government deficits are most likely to crowd-out private
investment if
a. consumers are purely "Ricardian".
b. interest rates rise sharply as a result of the deficit.
c. rising income increases the volume of saving and interest rates rise very
little.
d. there is a very large output gap.
e. none of the above; deficits never crowd out investment.
50. The long-term burden of government debt in a closed economy occurs when
a. foreign owners of Canadian debt demand repayment.
b. it is no longer possible to find individuals in the private sector willing
to finance the debt.
c. the burden of the debt is being borne by the current generation rather
than future generations.
d. the stock of physical productive capital is reduced because of past
crowding-out.
e. none of the above.
51. It is argued that government deficits can be a burden for future generations
if
a. higher interest payments are passed on to future generations without
positive benefits.
b. investing into research and development has no long term benefits to
society.
c. the social rate of return on spending is less that the interest rate on
the debt, then society is worse off.
d. all of the above.
e. none of the above.
52. An
a.
b.
c.
d.
annually balanced budget as a goal of fiscal policy
is extremely difficult to achieve and would be destabilizing.
is feasible and would be stabilizing.
is feasible but would be destabilizing.
would be stabilizing, but is extremely difficult to achieve.
53. An annually balanced budget is difficult to achieve as a policy goal because
a. a significant portion of the government's budget is beyond the short term
control of the federal government.
b. government has little control over interest rate charges on its debt
during a fiscal year.
c. tax revenues automatically rise during economic booms and fall during
recessions.
d. transfer payments rise during recessions and fall during economic booms.
e. all of the above are reasons why a balanced budget is difficult to achieve.
54. An annually balanced budget would
a. accentuate the swings in national income that accompany changes in
autonomous expenditure flows.
b. increase national income in response to changes in autonomous expenditure
flows.
c. reduce national income in all circumstances.
d. reduce national income in response to changes in autonomous expenditure
flows.
e. reduce the swings in national income that accompany changes in autonomous
expenditure flows.
55. Most economists believe that a budget balanced over the business cycle
a. is absolutely necessary for prudent management of the economy.
b. is the same as an annually balanced budget.
c. is a worthy idea but requires accurate forecasting and definition of the
business cycle.
d. would be procyclical.
e. would stabilize the economy and produce an annual budget balance of zero.
56. During a period of rising tax revenues, cutting back on government
expenditures
a. may be foolish, because this adds to the national debt just at the time
it should be reduced.
b. may be foolish, because this will cause an immediate economic downturn.
c. may be wise, so that during booms government debt growth can be reversed
before the next recession.
d. may be wise, because the resulting rise in the current deficit helps offset
the depressing effect of the higher taxes.
57. An
a.
b.
c.
d.
excess of payments
must equal the net
must equal the net
is not possible.
must be matched by
account.
e. must be matched by
account.
over receipts on the current account
debit balance of the capital account.
credit balance of the current account.
an excess of payments over receipts on the capital
an excess of receipts over payments on the capital
58. If
of
a.
b.
c.
country A and country B are trading solely with each other and the currency
country A appreciates,
the currency of country B must depreciate.
the currency of country B must appreciate.
the currency of country B may appreciate or depreciate, depending on the
elasticity of demand for the exports of country A.
d. the currency of country B may appreciate or depreciate, depending on the
volume of trade between the two countries.
e. none of the above
59. A depreciation of the domestic currency, ceteris paribus, tends to
a. encourage merchandise imports.
b. encourage merchandise exports.
c. discourage foreigners from travelling to Canada.
d. encourage Canadians to travel abroad.
e. have a negative effect on the trade account of Canada's balance of
payments.
60. A fall in the exchange rate, ceteris paribus, tends to
a. encourage merchandise imports.
b. encourage merchandise exports.
c. discourage Canadians from travelling abroad.
d. encourage foreigners to travel to Canada.
e. have a positive effect on the trade account of Canada's balance of
payments.
61. If the Canadian dollar appreciates, there will be a ______ in the demand for
foreign imports, and the number of dollars offered in the foreign-exchange
market will ______.
a. rise; rise
b. rise; fall
c. fall; rise
d. fall; fall
62. Suppose that in Canada we experience a fall in the Canadian dollar price of
foreign exchange. In this circumstance, the dollar will have _______ and the
exchange rate will have _____.
a. depreciated; fallen
b. depreciated; risen
c. appreciated; fallen
d. appreciated; risen
63. An increased preference of Canadian consumers for British goods would
a. shift the supply-of-pounds curve upward and to the left and lead to a rise
in the exchange rate.
b. shift the demand-for-pounds curve upward and to the right and lead to a
rise in the exchange rate.
c. shift the supply-of-pounds curve to the right and lead to a fall in the
exchange rate.
d. shift the demand-for-pounds curve downward and to the left and lead to
a fall in the exchange rate.
64. The supply curve for Japanese yen (ç) 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 imports
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.
65. An
a.
b.
c.
d.
e.
increase in the current account deficit may be due to
an increase in private saving.
a fall in domestic investment.
a fall in the government's budget deficit.
a rise in the government's budget deficit.
a rise in the budget surplus.
66. If a basket of goods costs 1000 euros in Europe and the Canadian dollar
exchange rate on the euro is 1.40, then the same basket of goods should cost
__________ in Canada.
a. $ 140.00
b. $ 714.29
c. $1000.00
d. $1400.00
e. $7142.90
67. Assuming flexible exchange rates, a decline in the world price of copper (a
major Canadian export), other sectors of the Canadian economy will _____ due
to the _____ of the Canadian dollar.
a. contract; depreciation
b. contract; appreciation
c. expand; depreciation
d. expand; appreciation
68. Assuming flexible exchange rates, a rise in the world price of copper (a major
Canadian export), other sectors of the Canadian economy will _____ due to
the _____ of the Canadian dollar.
a. contract; depreciation
b. contract; appreciation
c. expand; depreciation
d. expand; appreciation
69. With flexible exchange rates and zero capital mobility, the value of the
simple multiplier is
a. zero.
b. one.
c. smaller than the simple multiplier for a closed economy.
d. equal to the simple multiplier for a closed economy.
e. larger than the simple multiplier for a closed economy.
70. In an open economy with zero capital mobility, the automatic stabilizer role
played by imports is
a. larger with a fixed than with a flexible exchange rate system.
b. larger with a flexible than with a fixed exchange rate system.
c. larger with a fixed exchange rate system only if there is a trade deficit.
d. larger with a fixed exchange rate system only if there is a trade surplus.
71. With flexible exchange rates and zero capital mobility, an expansionary
fiscal policy causes _____ of the domestic currency and thus _____ shifting
of the AD curve.
a. appreciation; leftward
b. appreciation; further rightward
c. depreciation; leftward
d. depreciation; further rightward
72. In
by
a.
b.
c.
d.
e.
an open economy with capital mobility, the capital account is influenced
fiscal, but not monetary, policy.
monetary, but not fiscal policy.
neither fiscal nor monetary policy.
fiscal and monetary policies.
no policies; the capital account in such an economy is always zero.
73. In an open economy with flexible exchange rates and capital mobility, fiscal
policy is ______ effective at changing national income as compared to a closed
economy.
a. more
b. less
c. equally
d. none of the above
74. The most influential mechanism by which governments can influence capital
flows is
a. the money supply.
b. the price level.
c. government spending.
d. tax policy.
e. the interest rate.
75. Referring to Figure 36-3, an increase in demand or decrease in the supply
of foreign exchange will
a. encourage Canadians to buy more European goods.
b. encourage Europeans to buy fewer Canadian goods.
c. cause the Canadian dollar to appreciate.
d. cause the Canadian dollar to depreciate.
e. cause the exchange rate to fall.
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a
d
b
b
a
d
e
b
a
b
d
a
c
c
c
d
d
d
b
a
a
a
c
a
d
a
e
e
b
d
d
a
e
a
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
c
c
e
a
b
a
a
c
b
e
d
d
c
b
d
a
d
d
b
e
d