Problem 1. An increase in Canada's exports will always lead to an improvement in our current account. (true/false)
Problem 2. If a Canadian purchases shares in Microsoft, this shows up in the Balance of Payments Financial Account as a debit item only. (true/false)
Problem 3. Purchasing power parity cannot hold if the law of one price does not hold. (true/false)
Problem 4. A real depreciation of the canadian dollar increases aggregate demand for canadian output. (true/false)
Problem 5. The difference between the short run and the long run is the prices are less flexible in the long run. (true/false)
Problem 6. There is little empirical support for the Purchasing power parity theory because the assumptions behind PPP do not usually hold. (true/false)
Problem 7. If a tourist from New York buys a meal in Toronto, paying with a travelers check, this shows up in the balance of payments as a debit item in the current account. (true/false)
Problem 8. Under the monetary approach to exchange rates, an increase in either country's national income has no effect on equilibrium exchange rates. (true/false)
Problem 9. An increase in world relative demand for Canadian output causes a long -run real depreciation of the canadian dollar against the euro. (true/false)
Problem 10. A change in the money supply has no effect on the long run values of the interest rate or real output. (true/false)