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1. When a currency appreciates, the prices of its imports from other countries will: A. increase....

1. When a currency appreciates, the prices of its imports from other countries will:
A. increase.
B. decrease
C. remain constant.
D. fluctuates randomly.


2. When the dollar appreciates relative to the Canadian dollar:
A. Canadian goods become more expensive in the United States.
B. U.S. goods become more expensive in Canada.
C) U.S. residents tend to buy more from Canada, since the United States has a weak currency.
D) the United States sells more goods to Canada.


3. If the U.S. dollar appreciates, we do NOT expect that:
A) Americans will buy more foreign currency
B) Americans will buy more goods from abroad
C) U.S. exports to other countries will decline.
D) Americans will buy fewer goods from abroad

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Answer #1

a) "B"

an appreciation of the local currency makes the imports cheaper and exports costlier.

b) "B"

As the dollar has appreciated the Canadians will have to pay more for US goods and US will have to pay less.

c) "D"

We do not expect the US people to buy fewer goods as they will import more.

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