Suppose that Canada pegs its dollar to the U.S. dollar at a rate of $C1 = $US1 and that Canada is a major exporter of crude oil to the United States. The increase in the price of oil that occurred in the second half of 2007 is likely to:

A) cause asymmetric shocks to the U.S. and Canadian economies that will make it difficult for Canada to maintain the $C1 = $US1 exchange rate.
B) cause symmetric shocks to the U.S. and Canadian economies that will make it difficult for Canada to maintain the $C1 = $US1 exchange rate.
C) cause asymmetric shocks to the U.S. and Canadian economies and make it easier for Canada to maintain the $C1 = $US1 exchange rate.
D) cause symmetric shocks to the U.S. and Canadian economies and make it difficult for Canada to maintain the $C1 = $US1 exchange rate.


Answer: A) cause asymmetric shocks to the U.S. and Canadian economies that will make it difficult for Canada to maintain the $C1 = $US1 exchange rate.

Economics

You might also like to view...

If you purchase a Treasury bond, the Treasury bond is

A) an asset to you as well as an asset to the U.S. government. B) an asset to you, but a liability to the U.S. government. C) a liability to you, but an asset to the U.S. government. D) a liability to you as well as a liability to the U.S. government.

Economics

If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then the deadweight loss from monopoly equals

A) $21. B) $441. C) $882. D) $1,764.

Economics

Firms who effectively differentiate their product from their competitors' products do so by having:

A. real, not just perceived, differences in product design. B. perceived, but not real, differences in product design. C. real or perceived differences in product design. D. None of these statements is true.

Economics

How does a tax cut affect the expenditure schedule?

a. It causes movement to the left along the schedule. b. It causes the schedule to shift upward. c. It causes movement to the right along the schedule. d. It causes the schedule to shift downward.

Economics