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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