Suppose that people expect that the Canadian exchange rate will decrease in the near future. How will this situation affect the Canadian exchange rate?
A) The supply of Canadian dollars decreases, the demand for Canadian dollars increases and the exchange rate rises.
B) The supply of Canadian dollars increases, the demand for Canadian dollars decreases and the exchange rate falls.
C) The supply of Canadian dollars decreases, the demand for Canadian dollars decreases and the exchange rate falls.
D) The supply of Canadian dollars increases, the demand for Canadian dollars decreases and the exchange rate rises.
E) Neither the supply of Canadian dollars nor the demand for Canadian dollars changes.
Correct Answer:
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