In Determining the Exchange Rate Between the Canadian Dollar and British

question 104

Multiple Choice

In determining the exchange rate between the Canadian dollar and British pound, if Canadian income increases, then

• A)the demand for pounds will increase, leading to depreciation of the Canadian dollar, assuming exchange rates are allowed to float
• B)the demand for pounds will increase, leading to depreciation of the Canadian dollar, assuming exchange rates are fixed
• C)the demand for pounds will increase, leading to appreciation of the Canadian dollar, assuming exchange rates are allowed to float
• D)the demand for pounds will increase, leading to appreciation of the Canadian dollar, assuming exchange rates are fixed
• E)the supply of pounds will shift to the left, causing appreciation of the Canadian dollar, assuming exchange rates are fixed

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Definitions:

One-tailed Test

A statistical test that determines the direction of a relationship or difference, testing for either a positive or negative effect only.

Directional Research Hypothesis

A hypothesis that specifies the direction of the expected difference or relationship between the variables being studied.

Research Hypothesis

A statement predicting the relationship between variables, formulated to be tested by research.

Null

Typically refers to the null hypothesis in statistical analysis, which posits that there is no significant difference or relationship between specified populations, any observed difference being due to sampling or experimental error.