Figure 157 Alt Text for Figure 15

question 226

Multiple Choice

Figure 15.7 Alt text for Figure 15.7: In figure 15.7, a graph illustrates the quantity of dollars traded against the exchange rate.
Long description for Figure 15.7: The x-axis is labelled, quantity of dollars traded per day.The y-axis is labelled, exchange rate, peso to Canadian dollar, with values 1.00 and 1.05 dollars marked.A straight line supply curve slopes up from the bottom left corner to the top right corner.2 parallel straight line demand curves, D1 and D2 slope down form the top left corner to the bottom right corner.Curve D2 is plotted to the left of curve D1.The change from curve D1 to curve D2 is indicated by a left pointing arrow.Curve S intersects curve D1 at a point with a y-axis value of 13.5.Curve S intersects curve D2 at a point with a y-axis value of 13.00.Both points of intersections are connected to their corresponding y-axis values with dotted lines.The difference between the y-axis values is indicated with a down pointing arrow.
-Refer to Figure 15.7.Which of the following would cause the change depicted in the figure above?

• A)Lack of investment in infrastructure causes Mexican productivity to fall relative to Canadian productivity.
• B)A possibility of diseased poultry in Mexico causes Canadian consumers to decrease their preferences for Mexican-raised chickens relative to Canadian-raised chickens.
• C)A new trade agreement with Mexico results in Canada removing all tariffs on sugar imported from Mexico.
• D)An expansionary monetary policy in Mexico causes an increase in the price level of Mexican goods relative to Canadian goods.
• E)An increase in the Canadian savings rate relative to the savings rate in Mexico.

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Definitions:

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves, directly related to cycles of economic upturn and downturn.

Natural Rate

The long-term unemployment rate around which the labor market is considered to be in balance, where the number of people seeking jobs equals the number of jobs available.

Expansionary Gap

A situation in macroeconomics where the real GDP is higher than the potential GDP, leading to inflationary pressures.

Resource Prices

The costs associated with acquiring the inputs needed for production, such as raw materials, labor, and capital.