Suppose Interest Rates Fall Sharply in Canada but Are Unchanged

question 129

Multiple Choice

Suppose interest rates fall sharply in Canada but are unchanged in Great Britain.Other things unchanged, under a system of flexible exchange rates we can expect the demand for pounds in Canada to:

• A)decrease, the supply of pounds to increase, and the dollar to appreciate relative to the pound.
• B)increase, the supply of pounds to increase, and the dollar may either appreciate or depreciate relative to the pound.
• C)increase, the supply of pounds to decrease, and the dollar to depreciate relative to the pound.
• D)decrease, the supply of pounds to increase, and the dollar to depreciate relative to the pound.

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Definitions:

Model Minority

A demographic group perceived as achieving a higher degree of socioeconomic success than the population average, often applied in the context of some Asian American communities.

Asian-Americans

Americans of Asian descent who have contributed significantly to the cultural, social, and economic fabric of the United States.

Christian Coalition

A conservative Christian political advocacy group in the United States, focused on fostering Christian values in American politics.

Republican Party

One of the two major contemporary political parties in the United States, traditionally supporting policies of free market capitalism, fiscal conservatism, and limited government intervention.