In Recent Years, the Value of the Dollar Relative to the Euro

question 127

Multiple Choice

In recent years, the value of the dollar relative to the euro has declined. What does this mean for European businesses exporting to Canada?

• A) European countries are more likely to import Canadian goods or services.
• B) The Canadian trade deficit will most likely become greater.
• C) Canada is more likely to increase imports from European countries.
• D) European countries are more likely to avoid trade with Canada.

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Definitions:

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on investment.

Nominal Interest Rate

The percentage increase in money that the borrower pays the lender, not adjusting for inflation.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, over a given period of time.

Purchasing Power

the value of currency expressed in terms of the amount of goods or services that one unit of money can buy.