A rise in the expected rate of inflation in Canada will cause the exchange value of the Canadian dollar to depreciate.

Name: A rise in the expected rate of inflation in Canada will cause the exchange value of the Canadian dollar to depreciate.
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Question

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According to the graph, an increase in the expected rate of inflation in Canada will cause a shift in the demand curve for Swiss francs to the left (from D0 to D1), leading to a depreciation of the Canadian dollar (from C$0.80 to C$0.70 per CHF).

A Rise in the Expected Rate of Inflation in Canada