Suppose the exchange rate has been $1.50 per £1, but then it falls to $1.25 per £1.All things equal, how would trade be affected?

Question

Quizplus · Accepted Answer

When the exchange rate falls from $1.50 to $1.25 per £1, it means that the pound has become cheaper in terms of dollars. Therefore, Canadian importers would find British goods more affordable, leading to an increase in imports from Great Britain.

Suppose the Exchange Rate Has Been $1