Depreciation of the Canadian dollar will tend to:

Question

Quizplus · Accepted Answer

When the Canadian dollar depreciates, it means that it is worth less in foreign currency. This means that imports into Canada become more expensive, as each unit of foreign currency will buy fewer Canadian dollars. On the other hand, Canadian exports become cheaper for foreign buyers, as they can now buy more Canadian dollars for the same amount of foreign currency. Therefore, the prices of imports into Canada will increase, but the prices of exports from Canada will decrease for foreign buyers.

Depreciation of the Canadian Dollar Will Tend To