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Unformatted text preview: esos to the foreign exchange market and the dollar price of the peso will
most likely change in which of the following ways?
Supply of Pesos
Dollar Price of Peso
As pesos are exchanged for dollars, peso
decrease supply increase in depository institutions.
There is an increase in demand for the
decrease dollar and it appreciates, decreasing the
not change dollar price of the peso.
(41%) 2. If the real interest rate in Canada increases relative to the real interest rate
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
of its currency, and its exports?
Exports The higher real IR in Canada
Increase would attract more financial
Decrease capital “inflows” from overseas, c. Inflow
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