When people trade goods for money, money is being used as a medium of exchange

Sherri lives in Canada and is considering buying a new sofa. If the price level in Canada falls and the price level in the United States does not change, Canadian manufactured sofas are relatively

A) less expensive, so Sherri will likely purchase a U.S. manufactured sofa. B) less expensive, so Sherri will likely purchase a Canadian manufactured sofa. C) more expensive, so Sherri will likely purchase a U.S. manufactured sofa. D) more expensive, so Sherri will likely purchase a Canadian manufactured sofa. E) Both answers B and D could be correct depending on whether U.S. manufactured sofas were initially more expensive or less expensive than Canadian sofas.

The supply curve shifts rightward from S0 to S2 when the U.S. interest rate ________ and foreign interest rates are unchanged. The supply curve shifts rightward from S0 to S2 when the expected future exchange rate ________

A) falls; falls B) rises; rises C) falls; rises D) rises; falls E) None of the above answers is correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.