If the U.S. Demand for British Pounds Increases

question 17

Multiple Choice

If the U.S. demand for British pounds increases,

• A) the dollar price of a British pound will increase
• B) the dollar price of a British pound will decrease
• C) the exchange rate between dollars and pounds will be out of equilibrium
• D) the pound will fall in value against the dollar
• E) there will be no change in either the value of the dollar or the pound

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Definitions:

CCA Class

refers to the Capital Cost Allowance Class, a categorization used in Canadian tax to determine the depreciation rate for tax purposes on assets.

Annual Depreciation

The method of allocating the cost of a tangible asset over its useful life on a yearly basis.

Cost of Debt

The effective rate that a company pays on its total debt, reflecting the expense of borrowing funds.

Straight-Line Depreciation

A method of allocating an asset's cost evenly across its useful life.