Which of the following would an appreciation of the Canadian real exchange rate induce Canadian consumers to buy?
A)fewer domestic goods and foreign goods
B)more domestic goods, but fewer foreign goods
C)fewer domestic goods, but more foreign goods
D)more domestic goods and foreign goods

Question

Quizplus · Accepted Answer

An appreciation of the Canadian real exchange rate means that the Canadian dollar has become stronger relative to other currencies. This makes foreign goods cheaper for Canadian consumers, while domestic goods become relatively more expensive. Therefore, an appreciation of the Canadian real exchange rate would induce Canadian consumers to buy more foreign goods and fewer domestic goods, as they would be getting better value for their money by buying imports.

Which of the Following Would an Appreciation of the Canadian