1) People or firms use one currency to purchase another currency at the 20 Points international currency exchange foreign currency exchange international parity market O foreign exchange market 2) If the Canadian dollar is strengthening, then: 20 Points O Canada has purchasing power parity. O it has been unpegged from other currencies. 3) O Canada has adopted a hard peg policy. O it has appreciated in terms of other currencies. 20 Points 27 equalizes the prices of internationally traded goods across countries. An international parity rate Purchasing power parity The foreign exchange rate A floating exchange rate 4) When a government uses a by the market. 20 Points Osoft peg PPP currency hard peg exchange rate policy, it usually allows the exchange rate to be set 5) If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then: 20 Points the yen weakened against the dollar. the yen depreciated against the dollar. the dollar depreciated against the yen. the dollar appreciated against the yen.