Suppose the Exchange Rate Has Been $1

question 87

Multiple Choice

Suppose the exchange rate has been $1.50 per £1, but then it falls to $1.25 per £1.All things equal, how would trade be affected?  

• A) Canada would import more from Great Britain because the price of the pound has fallen. 
• B) Canada would export more to Great Britain because the price of the pound has risen. 
• C) Canada would export less to Great Britain because the price of the pound has risen. 
• D) Canada would import more from Great Britain because the price of the pound has risen.

---

Definitions:

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true, due to positive feedback between belief and behavior.

Deduction Theorem

A principle in logic stating that if a particular conclusion can be logically derived from a set of premises, then the implication of these premises leading to that conclusion is also true.

Gender Discrimination

Involves rewarding men and women differently for the same work.

Pleasure Principle

A psychoanalytic concept suggesting that individuals seek pleasure and avoid pain to satisfy their biological and psychological needs.