If the dollar depreciates, Canadian exports will eventually rise and Canadian imports will eventually fall.

Question

Quizplus · Accepted Answer

When the dollar depreciates, Canadian exports become relatively cheaper, making them more attractive to foreign buyers. As a result, demand for Canadian products increases, leading to an eventual rise in Canadian exports. On the other hand, Canadian imports become relatively more expensive, making them less attractive to Canadian buyers. This leads to a decline in demand for imports, resulting in an eventual fall in Canadian imports. Thus, both of these outcomes are likely to occur when the dollar depreciates.

If the Dollar Depreciates, Canadian Exports Will Eventually Rise and Canadian