1.On July 1, the exchange rate between the Canadian dollar (CAD) and the US dollar (USD) is 1 CAD for 0.80 USD. On August 1, the exchange rate is 1 CAD for .70 USD. Over this period of time, what would we say?

• The CAD has depreciated
• The CAD has appreciated
• The USD has depreciated
• The CAD neither appreciated or depreciated

2.Bonnie withdraws some cash from her checking account at Dolan Bank. Dolan Bank's assets will ________ and its liabilities will ________.

• decrease; decrease
• decrease; increase
• increase; decrease
• increase; increase

3.If exchange rates and prices in other countries remain constant, then an increase in the U.S. price level will tend to increase U.S. exports.

True

False

4.If a country experiences inflation, its exports become ________ competitive, which tends to ________ the economy.

• Less; impose a drag on
• less; stimulate
• more; impose a drag on
• more; stimulate

5.Deflation power parity is a situation in which goods cost the same in one country as in another when prices are compared using the market exchange rate.

True

False

6.The Japanese yen depreciates relative to the USD. What should we expect?

An increase in U.S. demand for Japanese goods

An increase in the number of Japanese tourists visiting the United States

An increase in Japanese demand for U.S. goods

A decrease in the number of U.S. tourists visiting Japan.

7.A decrease in consumer confidence tends to decrease aggregate demand.

True

False

8.Fiscal policy changes can shift the position of the aggregate demand curve.

True

False

9.On July 1, the exchange rate between the Canadian dollar (CAD) and the US dollar (USD) is 1 CAD for 0.80 USD. On August 1, the exchange rate is 1 CAD for 1 USD. Over this period of time, what would we say?

• The CAD has appreciated
• The CAD has depreciated
• The USD has appreciated
• The CAD neither appreciated or depreciated