How Will an Interest Rate Decrease in Canada Affect Equilibrium

question 170

Multiple Choice

How will an interest rate decrease in Canada affect equilibrium in the foreign exchange market?

• A)The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined.
• B)The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined.
• C)The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase.
• D)The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase.
• E)The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded cannot be determined.

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Definitions:

Intestinal Villus

Small, finger-like projections that protrude from the inner lining of the small intestine, increasing its surface area for nutrient absorption.

Lacteal

Lymphatic vessel in the wall of the small intestine that carries chyle from the intestine and absorbs fat.

Blood Capillaries

Tiny blood vessels that form a network to distribute oxygen and nutrients to tissues while removing carbon dioxide and waste products.

Microvilli

Tiny, finger-like projections on the surface of some epithelial cells that increase surface area for absorption.