Currency Traders Expect the Canadian Dollar to Depreciate

question 67

Multiple Choice

Currency traders expect the Canadian dollar to depreciate.What impact will this have on equilibrium in the foreign exchange market?

• A)The Canadian dollar will appreciate and the equilibrium quantity of Canadian dollars will decrease.
• B)The Canadian dollar will depreciate and the equilibrium quantity of Canadian dollars exchanged will decrease.
• C)The Canadian dollar will appreciate and the equilibrium quantity of Canadian dollars will increase.
• D)The Canadian dollar will depreciate and the change in the equilibrium quantity of Canadian dollars exchanged cannot be determined.
• E)The Canadian dollar will depreciate and the equilibrium quantity of Canadian dollars exchanged will increase.

---

Definitions:

Defined Contribution Plan

A retirement plan in which the employee, employer, or both make contributions on a regular basis, but the benefit received upon retirement depends on the plan's investment performance.

401k Plans

A retirement savings plan sponsored by an employer that allows employees to save and invest a portion of their paycheck before taxes are taken out.

Employer Match

A contribution made by an employer to an employee's retirement plan, equal to a certain percentage of the employee's own contributions.

Return On Investment

A measure of the profitability and efficiency of investment, calculated by dividing net profit by the initial capital cost.