(Figure: Market for Canadian Goods with US Inputs) Use the figure to answer the question.
The Canadian dollar has weakened against the US dollar, meaning that it takes more Canadian dollars to purchase a US dollar. What will happen to the supply of Canadian goods that use inputs made in the US? Choose the graph that correctly depicts your answer.

Question

Quizplus · Accepted Answer

When the Canadian dollar weakens against the US dollar, it becomes more expensive for Canadian firms to purchase inputs made in the US, causing the cost of production to increase. As a result, the supply of Canadian goods that use inputs from the US will decrease, shifting the supply curve to the left, as shown in Graph C.

(Figure: Market for Canadian Goods with US Inputs) Use the Figure