The U.S. and Canada are major trading partners. Suppose the Canadian dollar rises sharply in
Value against the U.S. dollar. At the same time, strong income growth in the U.S. increases the demand for Canadian exports. What happens to Canada's net exports if strong income growth in the U.S. has a stronger effect than that of the Canadian dollar appreciation?
A) Net exports will rise.
B) Net exports will fall.
C) Net exports will remain constant.
D) The effect on net exports is indeterminate.
Correct Answer:
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