If Canadian consumers expect the value of the Canadian dollar to depreciate against the US dollar (the Canadian dollar becomes weaker against the dollar), what impact would we expect this to have on Canadians' demand for American made products?
A)The demand for American-made items would fall.
B)The demand for American-made items would not change.
C)The demand for American-made items would rise.
D)The demand for American-made items would double.

Question

Quizplus · Accepted Answer

If the value of the Canadian dollar depreciates against the US dollar, it means Canadians would have to spend more Canadian dollars to purchase American-made products. This would make American-made products relatively more expensive for Canadians, leading to a fall in demand.

If Canadian Consumers Expect the Value of the Canadian Dollar