All else equal,if Canada raises its interest rates,
A)the dollar depreciates.
B)the U.S.demand for Canadian dollars increases.
C)the Canadian supply of Canadian dollars increases.
D)Both A and B.
E)Both A and C.

Question

Quizplus · Accepted Answer

When Canada raises its interest rates, it makes Canadian investments more attractive to foreign investors. This increased demand for Canadian dollars leads to an appreciation of the Canadian dollar against other currencies, including the US dollar.

All Else Equal,if Canada Raises Its Interest Rates