Practice Questions
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What does a high import/export ratio indicate about a country's trade balance?
A high import/export ratio means a country buys more from other countries than it sells to them. Other options are incorrect because Some might think ...
How do trade policies and tariffs influence exchange rates in a country's economy?
Trade policies and tariffs change how much a country buys and sells with others. Other options are incorrect because Some might think tariffs change c...
How does speculation in the foreign exchange market impact the trade balance of a country?
Speculation can change how much a currency is worth. Other options are incorrect because Some might think speculation only changes prices in the econo...
If a country's currency appreciates significantly, how is this likely to affect its trade balance, considering the import/export ratio?
When a country's currency gets stronger, imports become cheaper. Other options are incorrect because Some might think that stronger currency means mor...
How does a significant depreciation of a country's currency typically affect its trade balance, considering the import/export ratio and other economic indicators?
When a country's currency loses value, its goods become cheaper for other countries. Other options are incorrect because This answer suggests that exp...
If the exchange rate of USD to EUR is 1.2, how much would you receive in Euros for 120 USD?
To find out how many Euros you get, multiply the amount in USD by the exchange rate. Other options are incorrect because This answer suggests you get ...
What is the primary function of the foreign exchange market in relation to trade balance?
The foreign exchange market helps countries trade by letting them change their money into different currencies. Other options are incorrect because So...
What does the term 'trade balance' refer to in the context of currency exchange?
Trade balance shows how much a country sells to others compared to how much it buys. Other options are incorrect because Some might think trade balanc...
If the Canadian dollar appreciates against the peso, what is the likely effect on Mexico's exports to Canada?
When the Canadian dollar gets stronger, it means Canadians need more pesos to buy Mexican goods. Other options are incorrect because This answer sugge...
A Canadian company wants to purchase goods from Mexico. If the value of the Canadian dollar appreciates against the peso, how would this affect the trade balance for Canada? Classify the impact into one of the following categories.
When the Canadian dollar gets stronger, it can buy more pesos. Other options are incorrect because A stronger dollar makes Canadian goods more expensi...
Arrange the following steps in the correct sequence of how a currency exchange rate affects trade balance: A) Canadian consumers buy more Mexican goods, B) The demand for pesos increases, C) The exchange rate of the peso appreciates, D) The supply of Canadian dollars increases.
When the peso becomes stronger (appreciates), it costs more Canadian dollars to buy pesos. Other options are incorrect because This suggests that dema...
If the Canadian dollar appreciates against the peso, what is the most likely effect on Mexico's trade balance with Canada?
When the Canadian dollar gets stronger, it means Canadians need more pesos to buy things from Mexico. Other options are incorrect because Some might t...
How does an appreciation of the peso against the Canadian dollar affect Mexico's trade balance?
When the peso gets stronger, Canadian goods cost more for Mexico. Other options are incorrect because This answer suggests that cheaper exports help t...
A Canadian company wants to import goods from Mexico. As the Canadian dollar appreciates against the Mexican peso, how will this affect the company's import costs and the trade balance between Canada and Mexico?
When the Canadian dollar gets stronger, it means you can buy more with each dollar. Other options are incorrect because This answer suggests that stro...
Which of the following statements accurately describe the impact of currency appreciation on a country's trade balance? (Select all that apply)
Currency appreciation means the value of a country's money goes up. Other options are incorrect because People might think that higher prices for expo...
When the Canadian dollar appreciates against the Mexican peso, this typically results in a _____ in Mexico's trade balance due to more expensive imports and cheaper exports.
When the Canadian dollar gets stronger, it costs more pesos to buy Canadian goods. Other options are incorrect because Some might think a stronger dol...
Currency value appreciation: peso : Canadian dollar :: trade balance : ?
When a country sells more goods than it buys, it has a positive trade balance. Other options are incorrect because Some might think foreign reserves a...
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