Compared to a Situation in Which There Is No Change

question 221

Multiple Choice

Compared to a situation in which there is no change in the value of the Canadian dollar relative to the peso, in which of the following situations would you be worse off?

• A)You borrow 10,000 pesos, you earn income in Canadian dollars, the Canadian dollar appreciates against the peso, and you must pay back the loan in pesos.
• B)You borrow $10,000, you earn income in pesos, the Canadian dollar depreciates against the peso, and you must pay back the loan in Canadian dollars.
• C)You borrow $10,000, you earn income in pesos, the Canadian dollar appreciates against the peso, and you must pay back the loan in Canadian dollars.
• D)You borrow 10,000 pesos, you earn income in pesos, the Canadian dollar depreciates against the peso, and you must pay back the loan in pesos.
• E)You borrow 10,000 pesos, you earn income in dollars, the Canadian dollar depreciates against the pesos, and you must pay back the loan in dollars.

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Definitions:

Assignor

A person or entity that transfers rights or interests in a contract or property to another party, known as the assignee.

Obligations

Duties and responsibilities imposed by law or contract.

Assignability

The capability of a contract or right to be transferred from one party to another.

Public Policy

Principles and standards considered by governments in the management of public affairs and the protection of the interests of the society.