Question 2 of 25 In which situation is a country most likely to choose a flexible exchange rate for its currency? OA. A country believes that its currency will be in low demand in global markets. B. A country worries that the value of its currency could rise and fall unpredictably. C. A country has a reputation for having a strong and stable economy over time. D. A country wants to make sure that its currency is stable in all economic situations.

Why does purchasing-power parity theory NOT hold at all times? Select one: a. because prices are different across countries b. because wages are higher in some countries and lower in others c. because some goods and services cannot be traded d. because countries use different currencies

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market? a. A decrease in domestic interest rates O b. An increase in foreign interest rates c. Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation O d. Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices

A. Canada produces natural resources (coal, natural gas, and others), the demand for which has increased rapidly as China and other emerging economies expand. i. Explain how growth in the demand for Canada's natural resources would affect the demand for Canadian dollars in the foreign exchange market. Explain how the supply of Canadian dollars would change. ii. iii. Explain how the value of the Canadian dollar would change. iv. Illustrate your answer with a graphical analysis. 1