Under a System of Flexible Exchange Rates, a Decrease in the Demand

question 102

Multiple Choice

Under a system of flexible exchange rates, a decrease in the demand for a country's currency on the foreign exchange market will:

• A)​cause the country's currency to depreciate in value.
• B)​cause the country's currency to appreciate in value.
• C)​make the country's goods more expensive to foreigners.
• D)​make foreign goods less expensive to the country's citizens.

---

Definitions:

CCA Class

Categories under the Capital Cost Allowance system in Canada, used to determine the depreciation rate for tax purposes on assets.

Net Advantage to Leasing

The net benefit that results from leasing an asset versus purchasing it outright, considering all financial aspects.

Lease Payments

Periodic payments made by a lessee to a lessor for the use of an asset over a specified time period.

CCA Class

A category used in Canadian tax law that determines the depreciation rate for tax purposes on tangible capital assets.