Fill in the blanks to make the following statements correct. a. A depreciation of the Canadian dollar

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Fill in the blanks to make the following statements correct.

a. A depreciation of the Canadian dollar means that it takes __________ Canadian dollars to purchase one unit of foreign currency, and there has been a(n) __________ in the exchange rate. An appreciation of the Canadian dollar means that it takes __________ Canadian dollars to purchase one unit of foreign currency, and there has been a(n) __________ in the exchange rate.

b. Suppose a newscaster tells us that the Canadian dollar is valued at 89.6 U.S. cents. Using the definition from this chapter, we say the Canadian–U.S. exchange rate is __________, meaning that it takes __________ Canadian dollars to buy one U.S. dollar.

c. The exchange rate is determined at the intersection of the __________ curve for foreign exchange and the __________ curve for foreign exchange. An exchange rate above this level means an excess __________ foreign exchange, which is also an excess __________ Canadian dollars. The exchange rate will __________ and the Canadian dollar will __________.

d. If there is a rise in foreign GDP, and foreign demand for Canadian goods increases, there will be a(n) __________ in supply of foreign currency. The Canadian dollar will .

e. An increase in Canadian prices relative to foreign prices will cause a(n) in the demand for foreign exchange, and a(n) __________ in the supply of foreign exchange. The exchange rate will __________ and the Canadian dollar will therefore __________.

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Macroeconomics

ISBN: 9780133910445

15th Edition

Authors: Christopher T S Ragan

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