FIGURE 34-5
-Refer to Figure 34-5. Assume Canada has flexible exchange rates. The leftward shift in the supply curve from
S0to S1 may be due to a

Question

Quizplus · Accepted Answer

A leftward shift in the supply curve indicates a decrease in the quantity of Canadian dollars supplied for foreign exchange at each exchange rate. This can be caused by a decrease in the demand for Canadian exports from the rest of the world (which would result in a decrease in the supply of foreign currencies offered in exchange for Canadian dollars). Option B is the only answer choice that reflects this explanation.

FIGURE 34-5 -Refer to Figure 34-5. Assume Canada Has Flexible Exchange Rates