Ch 5 Global Trade [AP & Reg]

Ifrussiasells10bilworthofoiltothe

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Unformatted text preview: esos to the foreign exchange market and the dollar price of the peso will pesos to dollar most likely change in which of the following ways? Supply of Pesos Dollar Price of Peso a. increase increase As pesos are exchanged for dollars, peso peso b. increase decrease supply increase in depository institutions. c. decrease increase There is an increase in demand for the d. decrease decrease dollar and it appreciates, decreasing the dollar e. decrease not change dollar price of the peso. (41%) 2. If the real interest rate in Canada increases relative to the real interest rate real in Japan and there are no trade barriers between the two countries, then for Canada, which of the following will be true of its financial capital, the value Canada, financial value of its currency, and its exports? of its Capital Flow Currency Exports The higher real IR in Canada a. Inflow Appreciation Increase would attract more financial b. Inflow Appreciation Decrease capital “inflows” from overseas, c. Inflow Depreciatio...
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