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.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

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