A change in the exchange rate, other things remaining the same, brings a
A)change in the quantity of Canadian dollars demanded with no movement along the demand curve.
B)change in the quantity of Canadian dollars demanded and a movement along the demand curve.
C)change in the quantity of Canadian dollars demanded and a shift of the demand curve.
D)shift of the demand curve for Canadian dollars with a movement along the demand curve.
E)shift of the demand curve for Canadian dollars with no movement along the demand curve.

Question

Quizplus · Accepted Answer

A change in exchange rate, other things remaining the same, would result in a change in the quantity of Canadian dollars demanded and a movement along the demand curve. This is because the exchange rate is one of the factors that determine the quantity of Canadian dollars demanded, and a change in exchange rate would change the relative prices of Canadian goods and services, making them more or less expensive for foreign buyers. However, other factors that affect the demand for Canadian dollars, such as changes in income or preferences, would remain constant, so it would not result in a shift of the demand curve.

A Change in the Exchange Rate, Other Things Remaining the Same