Week 5 & 6 - Investment and The Open economy

Question 1

demand in the foreign exchange market is what

Answer 1

foreign countries buying our exports

Question 2

supply in the foreign exchange market is what

Answer 2

Canadians (domestic) buying imports

Question 3

An increase in exports bought by foreign people will increase the demand for dollars in the foreign exchange market due to?

Answer 3

world GDP ↑
barriers to trade ↓
domestic innovation and marketing↑
foreign prices ↑
domestic prices ↓

Question 4

An increase in imports bought by domestic people will increase the supply for dollars in the foreign exchange market due to?

Answer 4

Canadian GDP ↑
barriers to trade ↓
foreign innovation and marketing↑
foreign prices ↓
domestic prices ↑

Question 5

An increase in financial inflows bought by foreign people will increase the demand for dollars in the foreign exchange market due to?

Answer 5

Canadian interest rate ↑
Can business profitability ↑
foreign political risk ↑
expected exchange rate movements↑

Question 6

An increase in financial outflows bought by domestic people will increase the demand for dollars in the foreign exchange market due to?

Answer 6

Canadian interest rate ↓
Can business profitability ↓
foreign political risk ↓
expected exchange rate movements↓