If the Rate of Inflation in Canada Rises Relative to the Rate

question 65

Multiple Choice

If the rate of inflation in Canada rises relative to the rate of inflation in foreign nations,what will happen to the amount of Canadian net exports and subsequently the exchange rate for the Canadian dollar?

• A)It will decrease net exports, which in turn will increase the value of the dollar.
• B)It will increase net exports, which in turn will increase the value of the dollar.
• C)It will decrease net exports, which in turn will decrease the value of the dollar.
• D)It will increase net exports, which in turn will decrease the value of the dollar.

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Definitions:

Semiannual Interest

Interest that is calculated and paid twice a year on an investment or loan.

Bond Discount

The contrast in value between what a bond is worth in terms of its face value and the lesser amount it is sold for in the market.

Interest Method

A method used in finance to calculate the interest portion of a payment or the return on an investment over a period of time.

Semiannual Interest

Interest that is both computed and disbursed semi-annually on an investment or loan.