The Indirect Effect on Canadian Inflation of an Exchange Rate

question 59

Multiple Choice

The indirect effect on Canadian inflation of an exchange rate appreciation

• A) reinforces the direct effect.
• B) can sometimes offset the direct effect.
• C) can never offset the direct effect.
• D) is equal and opposite to the direct effect.
• E) is inflationary.

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Definitions:

Free Markets

Economic systems in which prices for goods and services are determined by the open market and consumers, with minimal government intervention.

Inequality

The state of not being equal, especially in status, rights, and opportunities, often discussed in social, economic, and political contexts.

Declaration of Independence

A historical document whereby the thirteen American colonies declared their independence from British rule in 1776.

Talents and Abilities

These refer to the natural aptitudes and learned skills that individuals possess, which enable them to perform certain tasks effectively.