Answer your response with True or False with proper reasons.
Problem 1. In National Income Accounting, foreign savings play no role.
Problem 2. Current account deficits are always worse than current account surpluses.
Problem 3. An import of U.S. treasury bills shows up only in the financial account.
Problem 4. Canada's net balance of payment position with the U.S. will always fall if the volume of our imports from the U.S. falls.
Problem 5. Exchange rate undershooting explains daily variation in exchange rates.
Problem 6. Higher Canadian inflation explains current strength of our currency
Problem 7. Vehicle currencies are driven by their value as a medium of exchange and a unit of account.
Problem 8. A tourist from New York buys a meal in Toronto paying with travelers cheques. This shows up in the balance of payment as a debit item in the current account.
Problem 9. Under covered interest parity, the forward premium is always positive if the Canadian dollar is expected to appreciate.
Problem 10. Purchasing power parity cannot hold if the law of one price does not hold.