If Speculators Expect the Spot Rate of the Canadian Dollar

question 66

Multiple Choice

If speculators expect the spot rate of the Canadian dollar in 30 days to be ____ than the 30-day forward rate on Canadian dollars, they will ____ Canadian dollars forward and put ____ pressure on the Canadian dollar forward rate.​

• A) ​lower; sell; upward
• B) ​lower; sell; downward
• C) ​higher; sell; upward
• D) ​higher; sell; downward

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Definitions:

Excise Tax

An indirect tax charged on the sale of a particular good or service, often included in the price of products like gasoline, alcohol, and tobacco.

Marginal Cost (MC) Curves

Graphs showing the cost of producing one additional unit of a good, illustrating how the cost varies with the level of output.

Diminishing Returns

A rule in economics that holds that after reaching a certain level, further investments in a specific sector will not yield higher returns if all other conditions stay the same.

Law of Demand

The economic principle stating that as the price of a good increases, demand for that good will decrease, and vice versa.