1. Assume that the U.S. income level declines at a much higher rate than does the Canadian income level. Other things being equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar?

2. Lucy and Fraid want to begin saving for their baby college education. They estimate that they will need $200,000 in eighteen years. If they are able to earn 6% per year, how much must be deposited at the beginning of each of the next eighteen years to fund education.