In May of 1970, Canadian authorities abandoned their fixed exchange rate policy which had, for many years, fixed the Canadian dollar at $0.925 U.S. Within a few weeks the freely floating rate was around $0.95. Based on this information what can be deduced? Select one: • A. Canadians significantly decreased their rate of cross-border shopping. B. Canada probably had a large balance of payments deficit prior to the change. * C. Canada probably had a current account surplus. D. Canada previously had an under-valued currency.

In May of 1970, Canadian authorities abandoned their fixed exchange rate policy which had, for many years, fixed the Canadian dollar at $0.925 U.S. Within a few weeks the freely floating rate was around $0.95. Based on this information what can be deduced? Select one: • A. Canadians significantly decreased their rate of cross-border shopping. B. Canada probably had a large balance of payments deficit prior to the change. * C. Canada probably had a current account surplus. D. Canada previously had an under-valued currency.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In May of 1970, Canadian authorities abandoned their fixed exchange rate policy which had, for many years, fixed the
Canadian dollar at $0.925 U.S. Within a few weeks the freely floating rate was around $0.95. Based on this information
what can be deduced?
Select one:
A. Canadians significantly decreased their rate of cross-border shopping.
• B. Canada probably had a large balance of payments deficit prior to the change. X
C. Canada probably had a current account surplus.
D. Canada previously had an under-valued currency.

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