If the U.S. national income grows much faster than that of Canada, this would tend to make the U.S. dollar
A) appreciate against the Canadian dollar.
B) depreciate against the Canadian dollar.
C) become worth more in terms of Canadian dollars.
D) become a ﬁxed-rate against the Canadian dollar.

Question

Quizplus · Accepted Answer

If the U.S. national income grows much faster than Canada's, Americans may increase their imports from Canada, increasing the supply of U.S. dollars in the foreign exchange market, leading to a depreciation of the U.S. dollar against the Canadian dollar.

If the US National Income Grows Much Faster Than That of Canada