If the price level in the United States increases more slowly than the price level in Canada, we would expect

Question

Quizplus · Accepted Answer

When the price level in the United States increases more slowly than in Canada, it means that inflation is lower in the U.S. compared to Canada. Lower inflation typically strengthens a country's currency because it preserves the currency's purchasing power. Therefore, in this scenario, the Canadian dollar would depreciate against the U.S. dollar.

If the Price Level in the United States Increases More