Consider the monetary transmission mechanism.In an open economy,such as Canada's,an increase in the money supply leads to a fall in the interest rate.This is followed by

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An increase in the money supply typically leads to lower interest rates, which makes domestic assets less attractive to foreign investors. This results in an outflow of financial capital as investors seek higher returns elsewhere, leading to a depreciation of the domestic currency, in this case, the Canadian dollar.

Consider the Monetary Transmission Mechanism