If the Purchasing Power of the Dollar Is Always the Same

question 153

True/False

If the purchasing power of the dollar is always the same at home and abroad, then the nominal exchange rate defined as foreign goods per unit of Canadian goods decreases if the Canadian price level rises more than the price level in foreign countries.

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Definitions:

Drawer

In contractual terms, the party that writes or drafts a cheque or bill of exchange.

Payor Bank

A bank that is responsible for paying a check or draft drawn upon it by its customer.

Certified Checks

Checks guaranteed by a bank, verifying that there is sufficient funds available in the issuer's account to cover the check.

Teller's Checks

A bank-issued check drawn on the bank's own funds and signed by a teller, typically used when someone needs to guarantee payment.