When the exchange rate moves from $1 = CAD1.5 to $1 = CAD1.66, it implies:
a. the U.S. dollar has depreciated in relation to the Canadian dollar.
b. U.S. imports of Canadian goods will rise.
c. the dollar price of the Canadian dollar has risen.
d. the Canadian dollar has appreciated in relation to the U.S. dollar.
e. Canadian imports of U.S. goods will rise.
b
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Factors that led to worsening financial market conditions in East Asia in 1997-1998 include
A) weak supervision by bank regulators. B) a rise in interest rates abroad. C) unanticipated increases in the price level. D) increased uncertainty from political shocks.
If a strong, persistent trend in the exchange rate appears to be inconsistent with any form of economic fundamentals, it is called
A. a speculative bubble. B. overshooting. C. uncovered speculation. D. exchange rate parity.