If a Foreign Currency Is Strengthening with Respect to the Canadian

question 4

Multiple Choice

If a foreign currency is strengthening with respect to the Canadian dollar, which of the following is true?

• A)Both the current-rate method and the temporal method would show an exchange gain.
• B)Both the current-rate method and the temporal method would show an exchange loss.
• C)The current-rate method would show an exchange gain and the temporal method would show an exchange loss.
• D)The current-rate method would show an exchange loss and the temporal method would show an exchange gain.

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Definitions:

Surplus

Occurs when the quantity of a good or service supplied exceeds the quantity demanded at a specific price, often leading to lower prices.

Price Ceiling

A legal maximum price that can be charged for a good or service, typically set by government to prevent prices from becoming too high.

Price Floor

A government or regulatory-imposed minimum price set above the equilibrium market price, aimed at ensuring that the market price of a good or service cannot fall below a certain level.

Shortage

A market condition where the demand for a product exceeds the supply at a given price, often leading to higher prices.